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Microsoft wouldn't rule out ISP acquisition
February 13, 2001 05:26 PM ET
by Michelle Rushlo
RELATED STORIES
•EarthLink, Sprint break up; EarthLink, Microsoft to hitch?
Microsoft (MSFT) would not rule out the acquisition of an Internet service provider at the right price, Chief Financial Officer John Connors indicated in a meeting with analysts today.
"We're looking at [possible acquisitions] more broadly than we have in the last 18 or 24 months" because valuations have become more reasonable, he said.
Speculation has run rampant in the last week that Microsoft might want to acquire No. 2 ISP EarthLink since Sprint (FON) gave up rights to acquire the company ahead of other suitors.
EarthLink (ELNK) has 4.7 million subscribers, while MSN has 4 million. Both companies are still small potatoes, though compared to AOL Time Warner's (AOL) 27 million subscribers.
Connors was cautious in his statements at the Robertson Stephens technology conference today, saying large acquisitions have a history of failing to add shareholder value and can be difficult to integrate.
He also said Microsoft is concerned that Internet access may become a zero- or negative-margin business because there is so much competition among communications companies, which have spent a fortune on infrastructure.
Microsoft will look to partner with communications companies in the coming years, Connors said, but it is also essential for the company to figure out ways to offer premium services that users will pay for.
He said some of Microsoft's software, including things like its Encarta encyclopedia, have the potential to become a viable service.
Microsoft wouldn't rule out ISP acquisition
February 13, 2001 05:26 PM ET
by Michelle Rushlo
RELATED STORIES
•EarthLink, Sprint break up; EarthLink, Microsoft to hitch?
Microsoft (MSFT) would not rule out the acquisition of an Internet service provider at the right price, Chief Financial Officer John Connors indicated in a meeting with analysts today.
"We're looking at [possible acquisitions] more broadly than we have in the last 18 or 24 months" because valuations have become more reasonable, he said.
Speculation has run rampant in the last week that Microsoft might want to acquire No. 2 ISP EarthLink since Sprint (FON) gave up rights to acquire the company ahead of other suitors.
EarthLink (ELNK) has 4.7 million subscribers, while MSN has 4 million. Both companies are still small potatoes, though compared to AOL Time Warner's (AOL) 27 million subscribers.
Connors was cautious in his statements at the Robertson Stephens technology conference today, saying large acquisitions have a history of failing to add shareholder value and can be difficult to integrate.
He also said Microsoft is concerned that Internet access may become a zero- or negative-margin business because there is so much competition among communications companies, which have spent a fortune on infrastructure.
Microsoft will look to partner with communications companies in the coming years, Connors said, but it is also essential for the company to figure out ways to offer premium services that users will pay for.
He said some of Microsoft's software, including things like its Encarta encyclopedia, have the potential to become a viable service.
