Buyers' remorse? 10 tech acquisitions spat back out
As CNET reported yesterday, social-bookmarking service Delicious is on a shortlist of services that are to be "sunsetted" in the near future as part of Yahoo's plans to downscale itself going into 2011.
In a blog post this morning, Delicious attempted to clear the air and calm the hysteria, saying that the product will not be shut down and that it's actively seeking a new buyer. If that ends up happening, it certainly wouldn't be the first such product to change hands.
In the tech industry, sometimes companies are bought and it just doesn't work out. In some cases, the parent company resells them. Sometimes the company even goes on to new successes. Click through to see a decade's worth of digital resales.
At the time, AOL's $350 billion merger with media conglomerate Time Warner, first announced in early 2000, was supposed to be an unprecedented, forward-thinking deal. AOL was king of the consumer Internet business, capable of bringing Time Warner into the 21st century--or so they thought. Then the dot-com bubble burst, and AOL soon turned into an albatross around Time Warner's figurative neck.
The company dropped AOL from the AOL Time Warner name in 2003, changed its stock symbol back to TWX from AOL, and by 2005 there were rumors that a spinoff of AOL was imminent. Last year, it became clear that it would actually happen, and in December 2009 the spinoff was complete. Now under the guidance of CEO Tim Armstrong, AOL took it as a chance to rebrand itself as a new digital-media company, further distancing itself from its dial-up access roots. The world (and Wall Street) still isn't sold on the new AOL, but getting free of Time Warner was an important step.
You had to sort of wonder what an e-commerce company wanted with a Web site-recommendation service: eBay bought StumbleUpon in 2007 for $75 million and no one was quite sure why. The best guess at the time was that maybe StumbleUpon's technology could somehow be worked into eBay for product recommendations, but it still just didn't seem like a great fit.
About two years later, eBay sold it back to its founders, Garrett Camp and Geoff Smith, and investors Accel Partners, August Capital, and Ram Shriram of Sherpalo Ventures. It seems to be doing pretty well on its own, and has become a favorite of savvy media companies who use its advertising program in the hopes of making their content achieve viral Web success.
Bungie played a crucial role in the launch of the original Xbox game console and Microsoft's foray into the world of console gaming. Microsoft acquired the company in 2000, just a year after Bungie had done a demo of Halo, the game franchise that would become synonymous with the Bungie name, and Xbox as a brand.
In late 2007, and just after the release of Halo 3, Microsoft and Bungie announced that Bungie Studios would be splitting off from Microsoft, but that several more Xbox exclusives in the Halo franchise would be coming in the future. The developer has since gone on to release two additional games in the Halo series: Halo: ODST and Halo: Reach, as well as signing a 10-year publishing agreement with Activision Blizzard.
Commerce giant eBay acquired Skype and its VoIP service in late 2005, then decided to jettison the company as part of a $2 billion deal almost exactly four years later.
Rumors of a resale had cropped up a year and a half ahead of the 2009 deal, with eBay CEO John Donahoe essentially telling the Financial Times that the company had struggled to find a place for the service as part of eBay's auction ecosystem, and that it would be "reassessing" Skype's role later that year. This was despite the VoIP service pulling in six-digit sales that had been up 61 percent over the previous year.
eBay still retains a 35 percent stake in Skype, with the rest going to an investment group led by Silver Lake, and including Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board.
Additionally, Skype filed for a $100 million IPO back in August, and recent reports pegged Cisco Systems as a potential buyer for the technology. The recent minting of former Cisco Vice President Tony Bates as Skype's CEO would seem to add some weight to those rumors.
Social media and blogging pioneer LiveJournal was founded in 1999, and it soon became a hub for young Web users looking to vent and connect. It had a unique audience: teenagers, subculture, and fan-fiction communities, and an astonishingly large user base in Russia. When it was sold to blog software company Six Apart in 2005, it soon became evident that Six Apart's management didn't quite have a grip on the culture of LiveJournal, and occasionally prompted mass outrage. This was exemplified by an instance in mid-2007 in which more than 500 journals were deleted because they contained sexually explicit discussions; Six Apart apologized publicly. Several months later, LiveJournal was sold to SUP, a media company in Russia.
IAC/InterActiveCorp chairman Barry Diller, one of the most notorious shopaholics in the billionaire moguls' club, has a habit of buying and reselling companies as though he were an indecisive eBay addict. But perhaps his biggest instance of jettisoning a prior purchase was when he spun off travel business Expedia in 2004--a move that effectively split IAC in two.
Microsoft had founded travel search site Expedia, and then spun it off into a publicly traded company in 1999 amid dot-com valuation fever. Two years later, when things had cooled down (to say the least), it was purchased by the Diller-owned Ticketmaster, which eventually was renamed IAC to reflect its burgeoning portfolio of digital media and commerce properties. But in 2004, with IAC's holdings growing ever more sprawled-out, Diller spun out Expedia along with a cluster of other travel businesses like TripAdvisor and Hotels.com under the umbrella name of Expedia Inc. It's still publicly traded, and IAC maintains a stake in it.
CNET Networks (now a part of CBS Interactive, which publishes CNET News) bought Webshots in 2004 in a $70 million deal.
The photo-sharing site became a larger part of CNET's digital content offerings alongside the company's other digital media brands, before being sold off to American Greetings in late 2007 for $45 million.
Lycos, one of the major names in Web 1.0, was sold to Terra Networks in early 2000 for $12.5 billion. Just four years later, Lycos was sold again to South Korea-based Daum Communications in what was reported to be a $95 million deal. That wasn't the end of the road for Lycos, though. Back in August of this year, Ybrand Digital bought the company from Daum Communications as part of a $36 million deal.
In what is one of the shortest stays on this list, geographic intelligence company MetaCarta was acquired by Nokia back in April before being sold off by the company to Qbase Holdings just three months later. In a release announcing the divestment, Nokia said it would "retain MetaCarta's geographic intelligence technology, which it is incorporating in its local search and other services."
The survival of Bebo is still far from certain, but let's be honest: It was headed for a pretty painful death at AOL. In an ill-fated attempt to play catch-up in social media, AOL acquired the social network, which was already losing to Facebook in terms of traffic and industry cred, in 2008 for a gargantuan $850 million. If AOL-Time Warner was the dot-com bubble era's iconically horrible M&A story, so perhaps was AOL-Bebo to Web 2.0: Almost instantly, it became clear that the price tag was ridiculously overvalued. Facebook was winning the social-networking game, and AOL's scattershot strategy soon veered away from running a community site. Reports suggested that not everyone in AOL's executive ranks thought the purchase was a good idea in the first place. Uh-oh.