Did Google Really Seriously Consider Buying A Stake In The NY Times?

from the seems-doubtful dept

Fortune has a story that's getting plenty of attention claiming that Google "seriously considered" an opportunity to purchase 19% of the NY Times that is being held by hedge fund Harbinger Capital Partners. Of course, no one seems to explain why Google would seriously consider such an investment. It seems like any analysis, whether serious or not, would suggest that such an investment would make almost no sense for Google, and almost certainly would cause more trouble than it was worth. It would, for example, freak out other newspapers, who despite their sudden desire to get Google to fund them, would claim that Google was unfairly favoring the NY Times at their expense. It would also raise all sorts of questions about how Google runs a content play. While Google has experimented with content plays with things like Knol, the company's focus has always been on enabling content creation -- not on funding content itself. In fact, it's this fundamental misunderstanding that has newspapers incorrectly thinking Google is trying to kill them, rather than recognizing it's actually helping them.

Filed Under: buyouts, newspapers
Companies: google, ny times

Is eBay Warming Up The Skype Billion-Dollar Buyout Plan?

from the round-two dept

Back in 2005, we marveled at the success that Skype backers had in talking up the price of the company, eventually suckering convincing eBay to put together a $4 billion deal for it. This was what we dubbed the "Skype Billion-Dollar Buyout Plan" in which companies used press hype to create valuations far above their actual worth (see YouTube and Facebook for a couple of examples). Of course, what eBay was never really clear on was how it planned to make money from Skype, and it later went back and forth on whether it had given up on looking for the mythical "synergies" between Skype and its core auction business. Last week, eBay's CEO conceded that those synergies were "minimal" -- leading to more speculation that eBay might spin Skype off.

And thus the cycle begins again, with a figure of $900 million to $1.2 billion tossed out there as a potential starting point for the second version of the Skype Billion-Dollar Buyout Plan. What's interesting is that just like four years ago, Skype's financials are murky, as Om Malik points out. The company also still faces the same big problem: monetization. As Skype gets bigger, that problem could become even more difficult. After all, if Skype continues to garner more and more users, more and more calls will shift from the paid SkypeOut service to free Skype-to-Skype calls. Skype is said to be profitable (although there's no indication of how profitable), but it seems pretty clear that it hasn't been the runaway success that would have justified its $4 billion price tag. While it's possible that any current sale could carry a more realistic price, somehow we imagine that eBay will try to use the same tactic that drove up its price for Skype to drive up the next buyer's price.

Filed Under: acquisition, buyouts, hype
Companies: ebay, skype

Powerset Turns Out To Not Be All That Powerful

from the powering-down dept

We never understood the hype around Powerset. It was the latest in an extremely long line of startups that claimed to focus on "natural language search" -- which is one of those holy grails for computer scientists who never stop to ask whether or not there's actually any market demand for it. As Google has shown, people don't need to use natural language to search. They're just fine doing keyword search. Yet, for some unclear reason, Powerset was able to raise a ton of money at a ridiculous valuation, and did so using all sorts of buzzwords (and vague patent threats). But when it finally released a product (just to search Wikipedia) it proved to be rather ho hum. Searching Wikipedia via other means was still more effective.

Now comes the news (first leaked last week) that Microsoft has bought Powerset. While both sides will present this as a big win, the numbers being tossed about ($100 million) are not a big win at all for Powerset's investors, and the exit certainly falls well short of the hype around Powerset. If Powerset was actually seeing any traction at all it never would have agreed to sell at that price. Basically, Powerset discovered what was widely known by industry watchers for years: natural language search is a neat challenge, but it's not something the market is demanding. It will be interesting to see if Microsoft actually does anything with the technology, but my guess is that it will slowly fade away. If anything, Microsoft may do a little saber-rattling over the patents Powerset hyped up, but little else.

Filed Under: buyouts, hype, natural language search, search, startups
Companies: microsoft, powerset