Microsoft will acquire enterprise social software maker Yammer for over one-billion dollars while taking a $6.2 billion write-down in its fourth quarter to vanquish Aquantive Advertising from its balance sheet.
The charge-off might represent issues of serious malfeasance for some corporations, but Microsoft’s $60 billion stockpile would seem to insulate the juggernaut from shareholder rebellion, at least for now. Nevertheless. the Aquantive acquisition goes down in history as one more in a series of boondoggles that have amounted to billions in “road kill” as seen through the rear view mirror.
Give Microsoft some credit for selling off part of Aquantive as early as 2009 for $530 million. The rest of the digital marketing agency never improved in value and will now be written off of the company’s online services division, which includes search engine Bing.
As The Puget Sound Business Journal reported: “Two years ago, Microsoft called the aQuantive acquisition “a strategic move to get us into the business and in those discussions at a very high level,” which it otherwise might not have achieved.
In an interesting bit of timing, former aQuantive CEO Brian McAndrews, who is also a venture partner with Seattle-based Madrona Venture Group, was appointed to the New York Times Board of Directors last week. While initially stepping into the role of senior vice president of Microsoft’s advertiser and publishing group after aQuantive’s acquisition in 2007, McAndrews left Microsoft in December 2008 and has since been active as an investor.”
Now the acquisition of Yammer has been questioned with newly furrowed brows concerning the timing, the actual value being acquired, and the wisdom of the largest software company in the world making the “buy or build” decision to “go outside for something they have the prowess to produce themdelves. Microsoft recently officially completed its $8.5 billion acquisition of Skype.
With its $1.2 billion in cash, Microsoft is taking on on a four-year old social networking company in Yammer. The deal puts Microsoft further into the game of developing social media services specifically for enterprises, an area where companies like Oracle, Salesforce and IBM have been active participants.
It will be interesting to see how the acquisition turns Microsoft’s new focus on social media services into a solidly profitable part of its larger business. As it has had to do with Skype, Microsoft will now face the challenge of figuring out how to monetize Yammer. Yammer reportedly currently has 4 million registered users, but only about 20 percent of those pay for premium services; the rest get the service free.
In a curious twist of fate and irony, The NY Times has named Aquantive executive Brian McAndrews to its Board of Directors! Let us get this straight. The NY Times wants the PT Barnum who sold a $6 billion dollar fiasco to Microsoft to help advise its digital direction? All those of us who are in the know can do is gasp, and marvel at the profligacy. [24×7]
