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Microsoft’s Shopping List

Posted on Monday, May 5th 2008

Let Yahoo deal with its mess, Microsoft should go cold turkey on them for a year now, and let Jerry Yang get fired for failing to create shareholder value. A far more interesting question looms on the Microsoft side. What is Microsoft’s Internet strategy going forward?

Here’s my shopping list for Microsoft, given cash is abundantly available, time isn’t:

* Kayak: Microsoft acquired Online travel search engine Farecast earlier, indicating to me that they are thinking about an alternate strategy already. The next acquisition: Kayak. Valuation: $700-$800 Million. Strategy: Continue to build out a vertical presence in online travel, acquire a few more companies for a total budget of $1.5 Billion.

* Trulia: Real Estate search engine Trulia can be a good trunk to build Microsoft a strong presence in the Real Estate vertical. Valuation: $100-150 Million. Strategy: Acquire another 3-4 vertical portals in Real Estate with a total budget of $1 Billion, including a couple of public companies like ZipRealty.

* SimplyHired, LinkedIn and eLance: Microsoft should also develop a strong presence in Jobs by acquiring LinkedIn (Valuation: $700-$800 Million), eLance (Valuation: $200-$250 Million), and SimplyHired (I haven’t done their valuation analysis). Strategy: Create a strong foothold in the massive Jobs vertical. Budget: $1.5 Billion.

* Shutterfly: Strong, independent, public company in the online photo space with a strong management team. Extremely cheap market price of $325 Million. Good strategy.

* eHarmoney: Offers a strong foothold in online personals. Valuation: $1-$1.2 Billion.

* Hi5: Smaller and lower key social media.

For a budget of less than $6 Billion, Microsoft can clean up some of the current jewels of the Internet, and build itself a great management team of net-savvy entrepreneurs. Especially if these entrepreneurs can be incentivized to keep building according to their dreams, and in their respective domains, Microsoft will end up boasting the most envied portfolio of Internet properties.

Meanwhile, what Yahoo would do under Jerry Yang’s disabled leadership, I dread to imagine!

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Maybe Yahoo needs to hire SM, so that you can buy all of these properties and build Yahoo into the powerhouse that Microsoft hoped to be someday.

Somebody’s got to do it. Many in the valley would much rather Yahoo did it than Microsoft. Here’s hoping for what seems impossible. Yang or SM would rock the world by having Yahoo pick up all these properties.

As you’ve said, there are some great properties available with much unlocked potential. Whoever picks them up first will be seen as the victor of the failed merger attempt.

I had not realized, until you pointed it out, that Yang is closed to building strong verticals, buying up these impressive upstarts, etc.

How does VP of corporate Development sound? or would you rather Chief Creative Yahoo? or would you need to take the Chief Yahoo job to get it done?

Realtosh Monday, May 5, 2008 at 1:42 PM PT

[…] Guest Author Sramana Mitra Let Yahoo deal with its mess, Microsoft should go cold turkey on them for a year now, and let Jerry Yang get fired for failing to create shareholder value. A far more interesting question looms on the Microsoft side. What is Microsoft’s Internet strategy going forward? […]

Alt Search Engines » Blog Archive » Microsoft's Shopping List Monday, May 5, 2008 at 2:25 PM PT

Realtosh, I can’t comment on this 🙂 Sramana

Sramana Mitra Monday, May 5, 2008 at 2:47 PM PT

I’m amazed that Google hasn’t already snapped up SimplyHired. Jobs is definitely a hole in their portfolio for a company who’s plan is to organize the worlds information.

Paul Pickthorne
Chief Free Officer
Smuz.com – 100% Free Job Board

Paul Monday, May 5, 2008 at 3:55 PM PT

Extraordinary article! In all the intensity of this Yahoo-Microsoft almost-deal, we might have forgotten to ask the most relevant question in the first place: why does Microsoft needs Yahoo? Which is to say, how come Microsoft, with all its might, has been unable to build a relevant, coherent Web presence by itself? In part, this link to an incredible video in YouTube entitled “Microsoft Re-Designs the Ipod Packaging” explains it: http://www.youtube.com/watch?v=EUXnJraKM3k

Microsoft has grown to be a soul-less corporation that has lost touch with what consumers value today. Yahoo is not far behind -hence its woes-. The difference between these two companies and the portfolio you mention in your article is that the latter are true representatives of the Web 2.0 ethos: nimble, personal, creative, emotional. I am afraid Microsoft’s corporate culture will simply smother everything it touches. It is good that the deal Yahoo-Microsotf didn’t take place: most likely, it would have been another AOL-Time Warner or Sprint-Nextel.

Rafael Grillo Monday, May 5, 2008 at 7:30 PM PT

hi5. great idea. Microsoft have a true global reach. So do Hi5.

jon Tuesday, May 6, 2008 at 7:39 AM PT

“For a budget of less than $6 Billion, Microsoft can clean up some of the current jewels of the Internet, and build itself a great management team of net-savvy entrepreneurs. Especially if these entrepreneurs can be incentivized to keep building according to their dreams, and in their respective domains, Microsoft will end up boasting the most envied portfolio of Internet properties.”
I seriously doubt this.

Sridhar Oruganti Tuesday, May 6, 2008 at 7:56 AM PT

[…] Microsoft?s Shopping List – Sramana Mitra on Strategy – Some interesting suggestions about what Microsoft should acquire instead of Yahoo: LinkedIn, Shutterfly, Kayak, Hi5 and a few others. Total bill: $6 billion according to this guy’s estimates. […]

the tweney review » Blog Archive » Links for May 2nd through May 6th Tuesday, May 6, 2008 at 5:30 PM PT