That Cash Sure Is Burning a Hole in Ballmer's Pocket
Posted by: Rob Hof on May 07, 2008
After deciding not to spend $22 billion or so of its cash to buy Yahoo, now there’s word in Kara Swisher’s Boomtown blog that Microsoft is interested in buying the rest of Facebook. It bought a 1.6% stake last year for $240 million, which gave the social network that crazy $15 billion valuation.
A lot of people are posing this wisp of a hint of an acquisition as an alternative to the failed Yahoo bid. Count me doubtful. Facebook has a great service, but it’s still unclear what kind of advertising is going to work well on it. And assuming Facebook comes up with something brilliant, it’s still going take awhile to build momentum. Nothing Facebook has will come close anytime soon to the scale of audience that Yahoo has. And if Ballmer didn’t want to pay up a little more for Yahoo, which at least has a proven if not fast-growing advertising business, why would he pay up even more, relatively, for Facebook? Mary Jo Foley at ZDNet’s All About Microsoft blog can’t figure it out either.
I’m also a little skeptical that Microsoft can get similar benefits by using a few of those spare billions in cash to buy up a bunch of Web 2.0 companies. Oh, I think it may well do some of that, but even for a voracious giant like Microsoft, integrating a half-dozen or a dozen Web companies in quick succession is a huge undertaking. And there’s no guarantee fickle users will stick around if and when they’re rebranded Digg Live or Meebo Messenger or something.
Despite all the talk about how Microsoft really is going it alone, it still seems like CEO Steve Ballmer can’t have really said goodbye to Yahoo forever. But if he goes through with either of these schemes, we’ll pretty much know he meant no.