Even Google's Cutting Back
Just like any other consumer during a recession, Google has put a lid on spending and has significantly slowed its purchase rate. While Google gobbled up 30 companies since 2005, it has yet to announce a single acquisition in the last six months. Could it be missing out on some good deals?
According to Reuters, Google CEO Eric Schmidt acknowledged the problem at an investor conference last month, saying:
prices are still too high for his liking and that Google's mergers and acquisition efforts are "pretty inactive."
That said, there are still rumors that Google may be ready to pull the trigger on a couple of deals, either with travel site Expedia or microblogging firm Twitter. Both could make sense, especially since they'd provide Google not only with key new technologies, but also with some much needed ad-serving real estate.
But Google is holding back. Perhaps, as Schmidt says, Google figures the economy is going to get worse before it gets better, and it would rather gobble up these companies once prices have hit absolute rock bottom, as opposed to whatever bargain price they bear now. But it could be a losing strategy, especially for a company with $16 billion on hand.
Take Twitter. It's getting a lot of press lately. Salesforce just announced plans to integrate Twitter within its cloud-based customer service tools. And now Microsoft, via its Federated Media ad network, is sponsoring Exec Tweets, a compilation of tweets from heavy-hitting corporate executives.
The microblogging site reportedly asked for a $500 million valuation during its failed talks with Facebook last year, but that number is sure to have dropped by now. And while it's not clear exactly how much money Twitter is making in these most recent deals, if any, it's definitely trying to find it's own way to monetize the business. And it's bound to hit on the right combo sooner or later.
Perhaps Google would be wiser to pull the trigger now. If one of these deals begins making Twitter some real money, Google's plan to bargain hunt may just backfire. After all, a bird (or tweet) in the hand is always worth more.