Microsoft puts its eggs into many baskets

Business Materials 20 October 2007 05:04 (UTC +04:00)

Microsoft chief executive Steve Ballmer said last week the company aims to pursue an independent path, focusing on up to 20 smaller acquisitions of $50 million to $1 billion each annually rather than mega-deals.

Armed with a cash pile of $23 billion, Microsoft has been rumoured to be targeting acquisitions like Yahoo, or social networking phenomenon Facebook.

Speaking to the Web 2.0 Summit in San Francisco, Ballmer would not comment directly on any potential acquisitions, but he said Microsoft's current focus is the "independent path."

"If at some point it makes sense, maybe then it makes sense. But that's not where we are going. We are driving in an independent direction," said Ballmer.

The CEO of the world's largest software maker said it is logical for people to speculate that main rivals would join forces to take on an industry leader. In this case, Ballmer was referring to dominant web search leader Google.

Microsoft historically has shunned costly acquisitions, opting to purchase lots of less expensive companies. But company watchers saw this year's $6 billion acquisition of digital advertising company aQuantive as a change in strategy.

Due in part to the aQuantive acquisition, Microsoft CFO Chris Liddell has said the company will spend more this fiscal year in acquisitions than on research and development for the first time in the company's history.

Microsoft has said it bought 23 companies in the 2007 fiscal year ended in June. Of those, it reported 13 acquisitions valued at a total of $1.34 billion, including an $800 million purchase of voice recognition technology company Tellme Networks. "We'll probably buy 20 companies a year consistently for the next five years," said Ballmer.

Microsoft placed third in the US web search market with a 10.3 per cent share in September versus 57 per cent for Google and 23.7 per cent for Yahoo, according to comScore. ( Reuters )