• Bloomberg News, Friday, May 18, 2007 11:30 AM

The big news of the day is that Microsoft Corp. is acquiring the Internet ad services firm aQuantive Inc. for the hefty price of $6 billion--it's biggest-ever acquisition. AQuantive owns two giants of the Internet advertising world: the marketing advertising services firm Avenue A/Razorfish and ad-management technology provider Atlas. The offer is 85% higher than aQuantive's closing price yesterday and more than 80 times its anticipated earnings this year.

The move comes in direct response to Google's $3.1 billion acquisition of DoubleClick last month. Atlas is an advertising management company similar to DoubleClick, meaning it provides management tools and services for agencies and an ad-serving platform for publishers. Avenue A/Razorfish offers a variety of digital services for marketers, including advertising, Web design and development.

To be sure, online advertising and ad management tools have been profitable business for aQuantive, but what does this acquisition mean for Microsoft? This is certainly not a content acquisition, but more of a technology-based one. Atlas will improve adCenter and bring with it a considerable client list on both sides of the advertising pond, while Avenue A/Razorfish should help improve Microsoft's Web sites and bring its extensive marketing relationships to the table. But these companies don't create or come up with content, which could indicate the demise of MSN and the Web portal strategy. It is clearly a move that brings Microsoft farther into Google territory.

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