Mergers and acquisitions are always risky, and some end up paying off better than others. Some of them have made profits and some of them have lost their money. Some decisions will be so complicated that they will be forced to acquire the company without knowing the consequences and end up like a dumb company for having made acquisitions. Here are few Dumb Tech Acquisitions which you will find bizarre.
10.HP and Palm
In 2010 Hewlett-Packard brought struggling Palm for a price of $1.8 billion. HP wanted to buy Palm because they thought that the purchase of Palm would be a good way to tap into mobile device growth. HP would take webOS platform that had gotten a very less attention as though webOS was destined for great things. Unfortunately, HP never exhibited as much passion for the OS as Palm. The company likely found the development costs of maintaining and building the platform unpalatable. HP contributed webOS to the open source community in 2011 and more recently sold part of the webOS product portfolio and team to LG. LG plans to use the platform to develop smart TVs. HP could have done amazing things but it did just the opposite. HP really did flub its acquisition of Palm.
9.Sprint and Nextel
In 2005, Sprint and NEXTEL merged to form a new Sprint NEXTEL corporation to boost their user base and revenues. Sprint purchased 50.1 % shares of NEXTEL communication. They wanted to compete against the better wireless powerhouse company Verizon and AT&T. But unfortunately the Sprint NEXTEL corporation had to face many problems. Many executives in both the companies were rebellious for the merger, hence many executives left the company after the merger which was the first rising unhappiness in the interest of the company. They also had a very major problem of incompatible wireless technologies.
Between 2008 and 2009, there were thousands of layoffs, losses worth billions, and plummeting in the value of the company’s stocks. The merger has proven to be an absolute disaster in the years since. Even today, Sprint is the financially weakest of the top three carriers and it continues to wind down Nextel’s legacy iDEN network.
8.CISCO and Pure Digital
In 2009, Cisco acquired privately-held Pure Digital Technologies, Inc. San Francisco-based Pure Digital, creator of the best-selling Flip Video brand, is a pioneer in developing consumer-friendly video solutions with mass-market appeal for a price of $590 million. Cisco a networking giant had always been out of touch of the consumer market and was new to consumer market. The starting of digital cameras getting integrated to smartphones were seen which is the main reason for Cisco to shut down the new division. It was argued that the patents from this unit could have proved valuable for Cisco’s teleconferencing segment and also that Cisco could have easily have sold this unit to someone as it was still profitable. It was a overpricing and a overcompensation tale for the company.
7.News Corp. and My Space
In 2005 News Corp. bought then social networking site MySpace for a price of $589 million. MySpace was then a very famous networking site. In the hope that News Corp. could advertise themselves and expand their empire of popularity they bought the most famous social networking media MySpace. But you will never know the future, as it turned out MySpace made a mistake of not updating itself with the world after it was acquired by News.Corp. A mistake which costed the company because there was new social networking company Facebook, which not only surpassed the company considerably destroying MySpace. Facebook came like a hurricane and took away every possible assets of MySpace mainly its users. Facebook book became the only social media in the Internet. This made NewsCorp. agitated which was desperate to sell MySpace. Later News Corp. sold MySpace for ad company specific media.
6.Microsoft and aQuantive
In 2007, the very popular IT company Microsoft purchased aQuantive for a price of $6billion. Microsoft purchased aQuantive in the high hopes of challenging Google in online ads for a mind-boggling of 85% premium. Google had just acquired DoubleClick and Microsoft clearly felt it needed to step up. Microsoft initially recorded more profits because it took about $1.1 billion in liabilities as part of the deal. But Microsoft couldn’t compete with the Internet giant and had to undergo some loss. Finally Microsoft admitted aQuantive didn’t boost sales like it had hoped.
5.Yahoo and Geocities
In 1999, Yahoo bought a web-hosting service Geocities for a staggering price of $4 billion. It bought in the hopes that users could put all of their content i.e. web pages under “cities” which had actual cites names. For example all the technology-related content would go to the “Silicon Valley” city and so on. But Yahoo had a good idea but did not pursue their idea to greater extent, so they were forced to say that the service would have a very bad impact not only on people but also to the brand Yahoo. Hence they completely shut down the service in 2009.
4.Lucent and Alcatel
It was rumored that Lucent’s strength in wireless business would compliment Alcatel’s global footprint and its prowess in fixed-line and broadband. Facing intense competition, the two decided to partner and form Alcatel-Lucent in 2006.But it couldn’t have been easy for either of the two, since Lucent–an offspring of the AT&T monopoly, it retained a common-and-control style–was hierarchical and centrally controlled; while Alcatel was entrepreneurial and flexible. Major cultural differences made this merger a disaster, Alcatel being a French company and Lucent being an American company, differences in time, language, and management styles, put this marriage between these tech giants into trouble since day one. The $27.5 billion company has posted six quarterly losses and has more than $4.5 billion in write downs. Also, the stocks have plummeted by around 50 percent. The company has reported a net loss of $554 million in 2010.
3.Microsoft and Danger
In 2008,Microsoft paid around $500 million for the mobile company Danger. In Danger, Microsoft acquired the kind of innovative, startup-grade talent that could have been instrumental in courting consumers in the mobile space. But this union went south in a hurry, and Microsoft relegated much of the Danger team to the ill-fated ‘Pink’ mobile project, which has reportedly suffered numerous delays and has meandered in
focus due to inexperienced management. Danger which was supposed to co-operate with Microsoft and help them make phones—but all the key employees left, and Microsoft was left with ‘Kin’, a social smartphone, that flopped very badly
2.ebay and Skype
In the year 2005, the very popular then ebay bought Skype technologies for a considerably large amount of $2.6 billion hoping that online buyers would prefer voice calls and video calls to online auctions, thereby increasing the communications and place a feather in the cap of the company. But it turned out to be wrong maybe even call it a disaster. Customers of ebay never liked the new irrational approach of the ebay for online auction. So they turned down the idea of using online voice and video calls. Instead of boosting the companies morale ant the name, the company had just done the opposite. For many years ebay tried its level best to hype their idea but as the ending goes worse they were forced to sell Skype technologies to private investors for a loss of approximately $2 billion. Skype was later acquired by Microsoft in 2011 for a whooping price of $8.5 billion. ebay survived the disaster.
1.AOL and Time Warner
In 2003, AOL purchase Time Warner for a whooping price of $164 Billion in the hopes to combine print and broadcast media with the internet to form a very powerful source of media. As soon as the deal was made the economy started coming down. This merger has got to be the worst of all time, it immobilized both companies for years, and destroyed billions in shareholder value. After a long painful of 10 years they announced their split which had already by the time had destroyed their valuable assets.