From Microsoft to Google – Acquisitions by tech giants

2014 also saw FB acquiring WhatsApp.

By The American Bazaar Staff

WASHINGTON, DC: Facebook’s acquisition of Oculus VR for $2 billion earlier this month fits the pattern of tech giants swallowing promising small — and in some instances big — companies.

Since Microsoft’s acquisition of Hotmail in the 1990s, industry leaders such as Google, Yahoo!, HP and Dell have gone on multiple buying spree. For Facebook itself, the Oculus purchase is the third major acquisition.

We take a look at how some of these mega purchases in the past decade and a half have worked out for the parent companies.

Microsoft acquires Hotmail (1998)
Price tag: $400 million.

Result: Founded by Sabeer Bhatia, an Indian American, and Jack Smith, Hotmail was one of the first webmail services. Even though the reported $400 million price tag appears like a bargain deal by today’s acquisition standards, Hotmail has been left far behind by rival Gmail, and to some extent, Yahoo! Mail as well.

AOL buys Time Warner (2000
Price tag: $164 billion.

Result: The largest acquisition in history also happens to be the largest mistake in corporate history as well. The total stock value of AOL went from $226 billion to about $20 billion.

JDS purchases SDL (2000)
Price tag: $41 billion dollars.

Result: Although you may not have heard of either of these companies, the collapse was catastrophic. By the time the deal was closed JDS stocks were only worth $13.5 billion.

Google buys YouTube (2006)
Price tag: $1.65 billion.

Result: Google seems to have hit a huge homerun with the YouTube deal. The video-sharing website is today the third-most visited site behind only Google and Facebook.

HP picks up Autonomy (2011)
Price tag: $10.3 billion.

Result: HP itself admitted that it overpaid Autonomy, an enterprise software firm. The company also lost 30 percent in shares in 2011.

Microsoft buys Skype (2011)
Price tag: $8.5 billion.

Result: Skype was Microsoft’s largest ever acquisition and a number of tech and financial industry analysts have argued that the Redmond-based company has vastly overpaid for Skype.

The jury is still out on this one.

Google lands Motorola Mobility (2012)
Price tag: $12.5 billion.

Result: Earlier this year, Google sold Motorola for $2.9 billion— a loss of nearly $10 billion in two years. It had sold Motorola’s set-top business for $2 billion last year.

Dell buys Quest Software (2012)
Price tag: $2.4 billion.

Result: Dell had to fight several rivals, including Insight Partners to win over Quest Software, even while hardware and personal computer sales are decreasing.

Was it worth the struggle?

Quest Software earned $857 million dollars in revenue in 2011.

Microsoft purchases Nokia (2013)
Price tag: $7.2 billion.

Result: With the purchase of Nokia, Microsoft not only gained 32,000 employees, but also a chance to break out in the mobile device market. Was it worth it? The tech giant has said the business would not be profitable until fiscal year 2016, and needs to sell more than 50 million smartphones a year to break even.

Yahoo! buys Tumblr (2013)
Price tag: $1.1 billion.

Result: It seems like Yahoo! was smart in buying Tumblr, which is seeing a large increase in blogs, posts and users, with no apparent signs of slowing down anytime soon. Tumblr also happens to be one of Yahoo!’s few products that reach out to a younger audience.

Facebook acquires WhatsApp (2014)
Price tag: $19 billion.

Result: With the purchase of WhatsApp, Facebook is gaining access to over 450 million users. WhatsApp has already gained more than $30 billion of SMS revenue and is gaining one million New users every day, a good deal for both parties—at least in the short run.

Google buys Nest Labs (2014)
Price tag: $3.2 billion.

Result: People ask: What does Google want with thermostats? Apparently, more smart products. Nest is creating products that follow your behavior. Larry Page, Google CEO said that Nest, “is “already delivering amazing products you can buy right now — thermostats that save energy and smoke/CO alarms that can help keep your family safe.” Jury is still out. 

(Feras Ismail contributed to this report.)

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