It’s A Numbers Game

The financial markets are in turmoil, Government borrowing in countries such as Greece, Portugal and the US is enhancing the downward spiral of stock markets around the world – and the tech titans are shelling out crazy money.

Google is spending $12Bn on acquiring half of Motorola. Microsoft is handing over $8.5Bn to get Skype. HP’s forking out $10Bn plus to bring Autonomy into the family.

The deals are only the latest in the mega-money payouts by the biggest tech firms:

  • 1998: Compaq buys Digital for $9.6Bn
  • 2002: HP buys Compaq for $25Bn
  • 2004: Oracle buys Peoplesoft for $10.3Bn
  • 2005: Oracle buys Siebel for $5.8Bn
  • 2005: eBay buys Skype for $2.6Bn

Then what?

In some cases, from an external perspective at least, the merged companies live happily ever after. But in others, the acquisition just doesn’t fit. For example, eBay buying Skype in 2005 for $3.1Bn then selling it to private investors in 2009 for $1.9Bn, who enjoyed a fourfold return when selling to MS a couple of years later.

The latest example of this: HP is thinking about spinning off its PC division, and shutting down webOS – which is the poison pill for the much-vaunted and only-recently-launched HP tablet. According to HP’s website, the tablet “works like nothing else”. Not for much longer, surely.

So what does HP get out of its $1.2Bn acquisition of Palm last year? Answers on a postcard please. Let’s just say that the same money would have bought around 2.6 million iPad2s.

Meanwhile, I’d love to be a fly on the wall at Silver Lake, the investor group that so dramatically turned around Skype’s fortunes. Maybe they are wondering if they could do the same for the PC business, which seems to have hit a midlife crisis at the age of 30.

Simon JonesOnPR Munich

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