Who Will Microsoft Buy Now With the $50 Billion Change Left? AOL? Facebook?


Despite the fact that Microsoft (NSDQ: MSFT) has withdrawn its offer to buy Yahoo (NSDQ: YHOO), the M&A machinery on all sides is still in full gear, and expect tons of activity in the next couple of months. The $50 billion or so that Microsoft was willing to spend is the money that’s still around, at least on paper. So who will Microsoft buy to make that leap it so hoped for? Steve Ballmer hinted the readiness in his letter to Jerry Yang: “We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.”

Some possible combinations:
— One would have to believe that Facebook will be back in play. Microsoft is already the advertising provider for the social networking service, and also owns a small part in it. This would give it a strong toe-hold in the social media space and help it experiment more with new advertising models, among other things.
— Then, to block and isolate Yahoo further, AOL’s (NYSE: TWX) buyout would be a possibility. Time Warner is certainly interested in spinning it out, and is still speaking to Yahoo on a combination. Google (NSDQ: GOOG) is a 5 percent shareholder of AOL, so things might have to worked around that.
— Certainly, if Diller really wants to get rid of IAC’s (NSDQ: IACI) disparate companies in this spinoff, then Microsoft could be a ready buyer.
— Then other smaller possibility include CNET (NSDQ: CNET), though hard to see synergies between the two companies.
— Further down the money chain would be tons of other companies like Twitter, Digg, Meebo and any other $50 million to $500 million company.


Looking Confident

Looksmart's 'clean -cut' independence in it's publisher/advertiser solutions and it's OPEN (Global) Exchange "interconnector" (of other Ads Networks), will soon get to be better understood by the market, I'm sure. Marchex are also a partner of Looksmart, is my understanding.


Ken Chu

Microsoft can get a huge amount of value in its own backyard out of a company called Marchex. They own 3 ad networks, an SEM business and a variety of analytics & online advertising technologies. Most importantly, marchex is solving the local search problem, the next major frontier in online advertising.

Looking Confident

All possibilities, no doubt. But way too complicated.

MSN could hand over it's Ads/Pubs "network" (entirely) to Looksmart and still have Looksmart operating as an "independent", accountable division, competing against it's (MSN's) own 'existing' search and advertising structure. (And MSN then get's to achieve a "bridge-ing" effect, between the "old"/existing and the "new" way of doing things), is how I see it …..

By "chunking in" some $8.00 per share, (an aprox. 35M shares ONLY, would need to be sold to them. It really doesn't matter, at WHAT price), MSN would then have a 60% "controlling stake" in Looksmart. Overinflated? Hardly …. it will cost MSN exactly "NOTHING", (in "real terms"), as they effectively "get their money back", in taking over FULL control of the Co ….

Looksmart would STILL 'trade' as LOOK and as an independent (fully accountable to shareholders), business, as it does now.

NOTHING (at all) changes, except the shareprice "value" ….. With LOOK now having that $280M, plus it's own cash, of $40M (and say, another$20M, with the "sale" of F url) or, a grand total of $340M – $350M to buy smaller Ads/pubs networks or, suitable "accretives". (Like THK, CNVR, etc).

Both MSN and Looksmart (particularly all it's shareholders), would ALL, be "off to the races", so to speak. (And LOOK could quickly get rid of, sell off, those unneccessary "other" smaller businesses, that both THK or, a CNVR may have).

Remember (also), that MSN has it's MSN "chats" that can be easily monetised (Globaly), either on a "geo" or, on even an "audience" (age, sex, contextual 'interest', etc), "demographical" basis …..

And with absolutely NO "intergration" required, at all, with these additional (above) considerations all being "add-ons", if you follow me ….

Looksmart hed-honcho "Ten-percent-Ted" can get to "hold down" his CEO role in a (new "look") now, an instant, "billion dollar" Co (with one or, two of the other board members also 'surviving'), but MSN would only need to appoint it's required "control" quota, within a quickly reconstructed board.

Such a "deal" would be an ULTIMATE "win-win-win" for ALL concerned and should NOT for a moment be considered as, just another "kite flying" exercise ….

And let me now ask the question?

How much would MSN's ($8.00pps X's 35M shares) be 'worth' to them when it then gets to be shown as as an "investment" on it's own "books", AFTER such a "deal" is/was completed?

Just ….."DO IT"



ps; Don't be "shy" now ….Remember, that "ideas" will ALWAYS remain "ideas" UNLESS, they are put into practice!


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