So Microsoft is buying aQuantive, an online ad company, for $6-billion in its largest acquisition to date — the largest since the $1.4-billion purchase of Great Plains Software in 2001, as far as I can tell. Is aQuantive, which I had never heard of until this morning, worth twice as much as Google paid for Doubleclick not too long ago? Hard to say. Paying twice a company’s market cap is pretty huge. Obviously, the beast from Redmond can afford it, since it probably generates $6-billion in free cash flow every couple of months. But does this remind anyone of the big optical-networking acquisition frenzy of the late 1990s, with Nortel and JDS Uniphase and that whole crew? Just asking.
ZDNet has some background on aQuantive, in which the only name I recognize is Razorfish, a legendary money-sucking dot-com bubble company that eventually got acquired after the bubble popped. Just for the record, the company’s revenue last year was $442-million, which makes Microsoft’s bid almost 14 times revenue. My friend Paul Kedrosky warns of the dreaded “winner’s curse” that often comes into play in auction-style scenarios. And Ashkan Karbasfrooshan, who knows a thing or two about online advertising, argues that aQuantive is well worth twice what Google paid for Doubleclick.