Microsoft Tired of Fishing, Cuts Bait

Mr. Softy still wants to be in the advertising business. It just doesn't want to be in the advertising agency business.

Microsoft (Nasdaq: MSFT  ) acquired Razorfish, the creative agency formerly known as "Avenue A | Razorfish," and which was once a part of aQuantive, for $6.6 billion in 2007. Now the division is up for sale, The Financial Times newspaper reports.

Morgan Stanley (NYSE: MS  ) is seeking a buyer on Microsoft's behalf, and ad agency conglomerate Publicis is pondering a bid, the FT reports. One analyst quoted by the paper valued Razorfish at between $600 and $700 million.

Whether the valuation makes sense isn't perfectly clear; Microsoft lumps its portal and advertising business together in filings with the SEC. But if Publicis is willing to bid as much as $700 million, Razorfish's client roster may explain why. AT&T (NYSE: T  ) , Disney (NYSE: DIS  ) , and Coca-Cola are among those who use its digital marketing services.

A sale would make sense for two reasons. First, Razorfish grants Microsoft no obvious competitive advantage over Yahoo! (Nasdaq: YHOO  ) or Google (Nasdaq: GOOG  ) in the ongoing war of ad networks. Creative is too different a beast.

And second, because Razorfish is so different from the rest of the company, it's most likely to thrive in a more wide-open culture than Mr. Softy can provide. They may not harbor the gin-and-whisky stained workforce you'd see on Mad Men, but ad firms such as Interpublic and Omnicom (NYSE: OMC  ) nonetheless have little in common with the snorting Redmond Rhino.

Still, give Microsoft credit: The logo and digital campaign for Microsoft's Bing search engine have proven to be very effective. Razorfish handled both.

But now Mr. Softy is apparently done fishing, and ready to cut bait. Good. Reel in the $700 million, Microsoft. There are better ways to use that money.

Get your clicks with related Foolishness:

Google is a Rule Breakers recommendation. Microsoft is an Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Google and a stock position in Interpublic at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy was left jelly-legged by that last pitch.


Read/Post Comments (2) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 930885, ~/Articles/ArticleHandler.aspx, 9/18/2014 2:15:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement