Microsoft Could Have Bought The Domain Industry For Less, Instead It Bought aQuantive & Lost Over 6 Billion

Back in 2008 we made the suggestion that Microsoft (MSFT) which was then sitting on $46 Billion should spent what we estimated would be less than $5 Billion and buy out all the top domain name portfolio’s, thereby shifting percentages of traffic away from Google for its own search engine.

Unfortunately Microsoft didn’t follow our advice.

However a few months Microsoft blew $6.3 Billion by buying  aQuantive,  an ad agency which was seen as a DoubleClick competitor.

I say they blew the $6.3 Billion because yesterday Microsoft announced they were taking a write off for the entire $6.3 billion dollar acquisition.

$6.3 Billion gone.

Oh and did I tell you it was an all cash transaction?

Microsoft said in a statement that “the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down.”

Microsoft also said its expectations for future growth and profitability at its online services unit, which includes the Bing,  are “lower than previous estimates”.

Image if Microsoft used those funds to buy the large highest quality domain portfolio’s in the world.

Instead of buying a now worthless asset they could have permanently shifted a significant amount of traffic away from Google, sending it to Bing and MSN, growing their product to the detriment of their largest competitor.

What a Shame.

What a mistake.

Comments

  1. says

    Also from the article

    In addition to the write-down, Microsoft said its expectations for future growth and profitability at its online services unit – which includes the Bing search engine and MSN Internet portal – are “lower than previous estimates”.

    and

    Microsoft’s online services division is the biggest drag on its earnings, currently losing about $500 million a quarter as the company invests heavily in Bing in an attempt to catch market leader Google. The unit has lost more than $5 billion in the last three years alone.

    Yay Microsoft. Way to “invest” in the future.

    Still waiting for Balmer to F*ing destroy Google.

    Good luck.

  2. says

    Actually, if they were to follow your advice now, it would be much cheaper to do so.

    Marchex, Tucows, etc are trading much lower than they were in 2008. Maybe Frank’s and your portfolios are more expensive than in 08 but overall it’s still much cheaper if they wish to do so NOW.

  3. says

    They should have bought AAPL stock for a dollar and should have bought tons of CALL Options.

    They should have made a deal with ICANN and bought .com, .net, .org and forward all traffic to Bing.

    Should’ve, Could’ve, Would’ve BUT Didn’t.

  4. says

    they still could. some people are making two cents a day on 100 unique visitor but instead of using domains to leverage bing they spend a hundred million dollars to run tv ads with bill gates and jerry seinfeld.

  5. says

    Microsoft has been buying generics for years, just not “all of them”. They also buy using proxies so as not to spend a lot. Their acquisition of Clubbing.com was turned into “Club Bing” and it’s now discontinued.

  6. Günther says

    Microsoft has been a fountain of terrible decisions for many years now.

    They are a closed-circuit intellectual marketplace where the only people allowed input at the executive level are yes men and the like-minded. They are a one trick pony, who won with the giant operating system- and they enjoy great wealth because of it- but also have consistently proven that they are unable to remain relevant, regardless of how much cash they may have (sound familiar?)

    Your enemies are one of your greatest assets. They will fearlessly point out your flaws unlike any other.

    The wise man embraces the criticism, analyses it and takes prompt action to correct it. The fool blows it off.

  7. Jack C says

    @ MrAutopilot

    The mass domain speculators are all squirming now that the glory days of parking are over and they’re coming to the painful realization that there won’t be any more whales like Marchex for the foreseeable future.

    Deep down, they all hoped they’d be ‘the next one’ for an offer like Ye took. They’d like to think that a company like Apple or Microsoft will come in and save the day with a wad of cash and buy them all out but companies like that, unlike small businesses who might want to buy one of their domains, aren’t quite as susceptible to the used car salesman sales tactics that define your typical “domain seller”.

    What’s left is the painful realization of recurring cost, with little prospect for recovery.

  8. says

    Jack C,

    Not sure who you meant by mass domain speculators and if you were referring to dotcom domains as a whole in your comment but you’re way off base. Parking is still strong and sales to individual businesses are humming along well, at least for me. I’m not looking for anyone to buy out my portfolio a la Yun Ye. Now more than ever is a good time to buy dotcoms as some of the big boys have their attention diverted by the gTLDs.

  9. Jack C says

    Tony- parking is not strong. There is no denying that, to do so is stupid.
    Sales are fine on my end too, but burning the furniture. Not a long term sustainable model.

    You aren’t the kind of person I’m talking about. Owns a few hundred marginal domains, small handful of decent ones, makes the occasional sale, develops a WordPress blog every now and then.

    Marchex, Microsoft nor anyone else cares about you (or me).

    We’re talking about guys who generate millions of UVs in relatively short periods of time from domains alone. You (and me) are nothing in their ecosystem. The difference is, you’re apparently think you are. LOL.

  10. says

    Jack C,

    I never said I was in anyone’s ecosystem. My point was if I’m doing fine, then the big boys must be doing even better. If you are struggling to hold on, don’t assume the big boys are too.

  11. Aggro says

    @ Jack C

    I’ve been saying that for years

    As the clock ticks down…before domain owners lifespan “expires”, they all hope that some big whale buys all the domains, crap, dog shit & all, at $1000 per domain across the WHOLE portfolio
    That’s a big number ifyou’re talking about 100,000 domains
    Of course these guys will never get a fraction of that selling piecemeal while fending off all the $200 domain “offers”…and being down the whole by several hundered $1000’s (for 100,00 domains) at the beginning of every year. LOL

    I’ve seen these big domain holders’ portfolios:

    90% is pure crap. The 10% are the domains people look up on the WHOIS

    Like:
    americanebiz.com
    hongkongebiz.com
    Dharmaebiz.com
    Askebiz.com
    bizdirlib.com
    ADVERTISINGEBIZ.COM
    AGELESSEBIZ.COM
    AMERICANEBIZ.COM
    ASTROLOGYEBIZ.COM
    BONANZAEBIZ.com
    maxiebiz.com
    popebiz.com

    Oh shit…that’s Jeff “nutcase” Schneider’s crap reg’d in yr 2000…Bwahaha
    Was that REALLY the best he could reg back in 2000?!

    And he wants ONLY $6M for usebiz.com (check his site) AND equity share!! LMAO

  12. ya says

    I’m a domainer in fear of change, wishing someone would buy me out. Hmmm….

    This company is Avenue A. Why did they change their name? Left as an exercise for the reader. Quite a scummy business if you remember the 1990’s. Right up there with “Gator” whatever they were called. Assuming you consider pop-up ads scummy. Some people probably have no problem with it.

    The guy who founded this company is the same billionaire who recently forced TED to air his little speech on income disparity. He also appeared in a recent article on thesame topic in GQ. He was an early Amazon investor.

    Needless to say, he has made out like a bandit. Maybe he’s feeling a little guilty?

    What is “value” anyway? ;)

  13. Archiba says

    Ballmer is the worst CEO they could’ve chosen after Gates. Epic flail. The guy who took over GE after Jack Welch is Ballmer’s only competition for biggest disappointment of the century.

    There is a video of Ballmer online celebrating onstage at some corporate function from years ago. He looks and acts deranged. It’s so awkward and embarrassing you’d think he would have quashed the footage at any cost.

    Anyway Bing is very good but not five billion good. And notice how Google had the brains to jump into the new tld’s with both feet while Mr Softy played it safe. WINNING!

  14. Overpriced says

    Wouldn’t suggest MSN made a mistake. It is like telling every domainer they made a mistake not to enter the domain name industry in the 90s. There are deals to be had. Any skilled person can create revenue opportunities with good content. It is not the end of the world for MSN.

    Those who are on top will eventually fall down. This applies to the domain name industry as well. MSN would have been on the hook for annual registrations on many bad names. Check the top platforms, which you will see a lot of worthless fluff. Owning many domains enable the best to get many offers.

    Keep turning down offers until you think the price is right. The new owner struggled to generate any traffic with their domain name. It doesn’t take a genius to find good domains at a bargain. Easy to dominate a space. Leverage that traffic to expand your network.

    MSN didn’t make any mistakes. It’s easy to compare the $6.5 billion loss to acquiring all domains. They can rebound with another venture. MSN is still competitive. How much traffic is actually quality? Are people finding what they want? Those who know how to provide quality information can succeed with domains.

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