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Microsoft (s msft) CEO Steve Ballmer and Adobe (s adbe) CEO Shantanu Narayen reportedly met recently in San Francisco and discussed a number of issues including a possible acquisition of Adobe by Microsoft, according to an account by the New York Times.
This would not be the first time the two have talked buyout. The Times said the two have met in the past to discuss the topic but were scared off by potential opposition from regulators.
The speculation was enough to send Adobe’s stock rocketing up 11.5 percent today. When reached today, Microsoft declined to comment while Adobe released the same statement it gave the New York Times: “Adobe and Microsoft share millions of customers around the world and the CEOs of the two companies do meet from time to time. However, we do not publicly comment on the timing or topics of their private meetings.”
The two companies have competed in the past with Microsoft pushing Silverlight as an alternative to Flash and also considered plans for a competitor to Adobe’s PDF format. But these days, the two see a common enemy in Apple (s aapl), which has reordered the personal technology space, cutting the legs out from under Microsoft’s Windows Mobile business while also establishing its own crusade against Adobe’s Flash technology.
The two apparently talked about how to partner up to blunt the power of Apple in the mobile market. The talks could have amounted to discussions about getting Flash on upcoming Windows Phone 7 devices, which they will not ship with. Or there may be other ways the two can work together to fight Apple. But either way, it’s a measure of how much power Apple wields these days, prompting competitors to huddle together in an attempt to out maneuver the new bully on the block.
While Microsoft may have been stymied in the past by regulators looking to check its power, the fact is it’s no longer the sole behemoth anymore. Apple’s market cap has soared past Microsoft while Google (s goog) continues to be a major competitor at every turn. An Adobe purchase would be a large acquisition, even for Microsoft, which has about $36 billions on hand. Adobe has a market cap of about $15 billion.
It’s unclear what this will lead to. But one thing is for sure, Adobe shareholders have got to be happy with the news.
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