Microsoft to sell Razorfish; needs to focus on search, Windows
Filed under: Company News, Technology
Microsoft (NASDAQ:MSFT) is preparing to sell digital ad agency Razorfish. What it is doing with the company in the first place is anyone's guess. It got the business when it bought ad targeting company aQuantive two years ago. It is a wonder that it did not offer the operation for sale then.
According to the FT, "One analyst valued Razorfish at $600m-$700m." If the downturn in online advertising continues, Microsoft may be lucky to get that much.
The divesting of Razonfish shows how the law of unintended consequences can play out in M&A.
The Microsoft issue with the digital ad operation is not unlike the one that Oracle (NASDAQ:ORCL) has with the hardware operations of Sun (NASDAQ:JAVA) which it is in the process of buying. Oracle says it may want to be in the hardware business, but the margins are poor and Sun has a very modest part of the server industry worldwide. Oracle may be faced with owning something which is nearly useless to it.
Microsoft is girding for a long and very expensive war in the search industry now that it has launched its Bing search engine. It releases Windows 7 in October. A great deal of the company's earnings over the next two or three years will depend on how well the latest Windows is accepted. Its predecessor, Vista, did not do particularly well.
Redmond has enough to deal with. It certainly does not need to own an ad agency.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
7-25-2009 @ 1:45AM
Jacky said...
Lets see what will be the next achievement of Microsoft...Hoping it would not resembles from Vista its a headache............
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