M&A Mania Just A Sign Of The Times

from the it's-a-party dept

With so much talk about M&A these days, it’s worth analyzing the conditions that are fostering this situation. It’s not an easy question, since current market conditions aren’t that different than they were a year ago, when there were a lot fewer deals. The Wall Street Journal tries to suss out a few reasons, including the continuing low interest rate environment (although they were lower a year ago), and a lack of regulatory obstructions — there’s a widespread sense that the DOJ has been rendered powerless to stop mergers ever since it failed to block Oracle’s purchase of PeopleSoft. Still, these reasons don’t seem robust enough to fully explain the spate of real or imagined dealmaking. The simplest answer may come from looking at the stock market. Take a look at what happened last Friday when rumor spread that Microsoft might buy Yahoo. While Yahoo’s stock surged, Microsoft’s stock barely dipped. In normal market conditions, you’d expect the announcement of a very risky, desperate-looking $50 billion acquisition to hit the acquiring company hard. The fact that it didn’t suggests an unusually high amount of optimism. The fact that markets around the world are all pushing new records confirms that optimism is indeed widespread. So perhaps all of these deals aren’t reflective of any significant economic shifts, but rather a lot of confidence than any investment, no matter how risky, will ultimately work out.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “M&A Mania Just A Sign Of The Times”

Subscribe: RSS Leave a comment
R. Titus (user link) says:

M&A Mania

At the end of a big growth cycle there is always an increase in M&A activity as the cash-rich old guard, if they are smart and quick, buy their way back into relevancy through quick strategic M&A. More importantly, with the buzz in tech coming back, those with $$$ are worried that prices will go up as the economy improves and/or in case a bubble 2.0 develops. Better to buy now, especially if it’s accretive.

Microsoft, missed the boat with the Internet and specifically the portal business. Frankly have not had the success with MSN which they should have (failing to ever really capitalize on being the default setting on their browser.) RandomThought is also correct; they do not have a really successful ad business yet.

But what this is really about is the next generation desktop, which will be distributed via browser. Google has it, Sun has it, Yahoo + Microsoft might have it; though neither has really succeeded in developing this separately.

The days of the dominance and importance of the OS are waning and MSOFT needs to protect its flank.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...