Google’s money looked better than Microsoft in DoubleClick bidding |
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The big tech news over the weekend was Google’s $3.1 billion cash bid for DoubleClick and today’s market (disclaimer: I own GOOG stock) should reflect the news. Google isn’t messing around with stock like they did with YouTube, this is a cash deal.
This morning an unindentified source at Times Online indicates:
Microsoft matched Google’s $3.1 billion (£1.56 billion) bid for DoubleClick but was snubbed by the largest independent broker of online display advertising, according to one source close to the deal.
Microsoft isn’t happy about being the odd company out in this deal and is playing the antitrust card, joined by AT&T yesterday:
Bradford L. Smith, Microsoft’s general counsel, said in an interview yesterday that Google’s purchase of DoubleClick would combine the two largest online advertising distributors and thus “substantially reduce competition in the advertising market on the Web.”
Coming off my vacation, I’m still processing this news but it’s obvious why Microsoft is concerned. Microsoft had plenty of cash to bid at the table against Google and could have done more than match Google’s bid, if that is even true. This is going to make it even harder for Microsoft’s AdCenter service to gain any traction. Microsoft should look in the mirror on that one for blame though. They still haven’t made that service available to webmasters en masse. The ship has sailed and it might be too late for them to make an impact. And what about Yahoo who bid on DoubleClick too and is also complaining about possible antitrust violations?
Maybe this puts Yahoo back on the table? If this DoubleClick deal goes through I don’t think Microsoft will get outbid by Google on a Yahoo acquisition.
Finally there is the question if DoubleClick was really worth $3.1 billion? That be Skype territory and thus far hasn’t proven to be worth it. DoubleClick makes a lot more sense for Google than Skype did for eBay and if Microsoft was going to be a force to reckon with using AdCenter then DoubleClick would have been a strong component.
How do you feel about this deal?
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I think that the deal makes a lot of sense to Google, but I also think that it’s an admission that Google can’t maintain their growth rate through pure organic growth. While the acquisition is chump change as far as Google goes, if I was a shareholder I’d only feel about 30% comfortable about seeing my shares diluted from the transaction. In the long run, I’m sure that this will end up being a great deal for the company, but I am a bit surprised to see the markets responding so positively to the short term ramifications from the deal. Google has been an internet juggernaut, but the bigger the company gets, the harder it will be for them to continue to impress Wall St. I don’t think their growth run is over by any stretch of the imagination, but their stock has certainly slowed down over the last year or so and it will become harder and harder to maintain their growth rates without buying more companies, as they get bigger. I don’t think that bad things are going to happen to Google, but at these levels, I’d be a little cautious, especially with so much selling going on, every time the stocks spikes.
Comment by Davis Freeberg — April 16, 2007 @ 8:53 am PST