Lets start from te beginning of time with technology. It all started with Microsoft, Apple and IBM. These companies were at the heart of the computer industry
Microsoft had solid sales (little to no investment, not like in todays tech markets). The deal between IBM and Microsoft is maybe the best deal ever made in tech history 😎. IBM was foolish enough not to think about the software and only about hardware during that time. IBM also had a widespread network of retailers, billions in sales. So for every software license from Microsoft sold through IBM, Microsoft would get a percentage. This was the foundation for Microsoft’s enormous wealth. And the funny thing is, MS didn’t even had a OS 😅, they bought one for a couple of thousand dollars, made a few changes here and there and sold it to IBM. Clever huh😏. In all fairness Bill gates, Paul Allen and Steve Ballmer were highly intelligent and VERY smart, well above world’s average 🤓. So not everyone could have made that deal work, but they did.
Why do I tell this? It is the very foundation of MS, no investments, no lending, pure CASH. That is what kept Microsoft standing all this time. So yes, when you look at acquisitions like Skype, Nokia, Yammer and most recently Swiftkey, those numbers just do not stand up. They are crazy🤑. But when you have BILLIONS in cash reserves and you frankly have no idea what to do with💰💰💰. Also nerds weren’t very popular during 1980-2007 because during that time😢, tech wasn’t that popular, but the Iphone changed that completely.
Are the acquisitions numbers normal, no way! That is my opinion. Let’s take some Microsoft examples.
Skype for example had no business model what so ever. I mean, there was no serious income, at least not in the hundreds of millions let alone stand billions😂 😂 . So why $8,500,000,000. Because MS has an ego and it trumped all other offers.
Listen to this, LA Clippers is owned by Paul Allen. This guy is worth around 18 billion dollars. The initial offer for the basketball team was 80 million, that was a fair price. But Allen swooped in with a $1,200,000,000 cash dollar offer. It just idiotic. Some tech billionaires have truly no sense of money and how much something is worth.
Back to Microsoft, they bought Yammer, basically an instant messaging platform with some other features for, wait for it…. you guested it right, $1,200,000,000. Look I don’t know the financials exactly but it takes time to make millions in actual sales let alone stand billions in sales. But I saved the best, the Nokia deal. Damn!!! Normally you would get fired for such a deal. First of all, before the deal got made a ceo trade was made which got some alarm bells ringing in my ear. Former business development manager Stephen Elop from MS went over to Nokia to lead in 2010, I immediately thought that would end-up in the hand of MS. You can maybe see it in my tweets. Nokia was years before that the pioneer in phones, it probably had very valuable assets like patents which MS could use. Three years later, what happened, MS pays $7,200,000,000 to buy Nokia.
More recently they acquired a ‘smart keyboard’ for a whopping $250,000,000. Yes, it was a popular keyboard. But please let’s be honest. If en when MS would make their own clever keyboard and would push it on you through an update, you would use it. There would be a chance the keyboard ‘could’ suck, they have had bigger software screw-ups like windows vista for example. Still programming an intelligent keyboard, Microsoft had world-class programmers and lawyers for that matters (because of legal issues and anti trust kind of things). So would that be a big deal? No.
Look not all acquisitions are crazy but a lot, there just overpaid.
I have truly no idea yet, how it is to be a millionaire of even a billionaire for that matter. I believe it has its fair share of pros and cons. Still this just crazy…