A Double Take at DoubleClick

Online-ad pioneer DoubleClick may be changing hands again. Nearly two years after the company was bought out by a pair of private-equity firms in a $1.1 billion deal, Microsoft (Nasdaq: MSFT  ) may be willing to pay nearly twice that much to snap up the company. The Wall Street Journal is reporting that Microsoft is one of the potential suitors talking to the company.

It's easy to see why Microsoft would want in on DoubleClick. The company that started off as a leader in graphical banner ads has become a digital marketing specialist in recent years. Enabling companies to matter more in cyberspace can be a pretty sweet business. Just see how well ValueClick (Nasdaq: VCLK  ) and aQuantive (Nasdaq: AQNT  ) have done since DoubleClick last traded publicly two summers ago.

This is the kind of deal that Microsoft needs before it falls too far behind Google (Nasdaq: GOOG  ) and Yahoo! (Nasdaq: YHOO  ) in paid search. DoubleClick has been at it for more than a decade. In that time, it has amassed 1,500 clients, including Ford (NYSE: F  ) and TheStreet.com (Nasdaq: TSCM  ) .

The company is on the cutting edge. Just as the portals are starting to roll out video ads, DoubleClick beat the industry to the punch by rolling out streaming live video ads last month.

Under a more predictable market, DoubleClick would probably be shaking off its suitors and going public on its own. Rather than take its chances and risk catching the IPO cooties, its best bet may be to tumble into Microsoft's waiting -- and hungry -- arms.

Microsoft is an Inside Value recommendation. Yahoo! is an active Motley Fool Stock Advisor pick. aQuantive has done well as a Rule Breakers selection.

Longtime Fool contributor Rick Munarriz believes that contextual paid search is far more effective than banner and rich media ads, though the streaming ads to promote New Line Cinema's movie 23 are intriguing. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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