Adobe just made a very surprising acquisition yesterday as it confirmed it had agreed to buy Omniture Inc for $1.8 billion. The announcement was met with skepticism as the stock lost 6,4% of its value during the day despite the Nasdaq being up 1,42%, quite an underperformance. As in any move, there are many reasons for the major drop.
First off of course would be the very expensive price Adobe ended up paying as it paid 24% over Thursday’s closing price of Omniture, which honestly I do not understand at all. It seems improbable that Adobe had to pay such a premium for a company that did not seem to have that many potential acquirers running after it. There are obvious reasons to pay a little over market value in order to be able to close the deal more easily. However, paying 24% over the price seems like an excess.
The second and even more concerning reason in my opinion is the logic behind the purchase. Omniture provides expertise that will help Adobe enter the analytics area. Michael Olson, a Piper Jaffray analyst said that Adobe was trying to diversify beyond being a just a maker of development tools. That could make sense. But entering the analytics area where it will directly compete with many other high profile competition does not sound like the best decision Adobe could make. When speaking about analytics, we increasingly think of Google which offers a very sophisticated product free of cost. Of course that makes it very difficult to compete. If the goal was to help its customers get more accurate information about their advertising performance, it would seem to me like there are cheaper ways to get this done than doing an acquisition….
Once more, this is probably a panic move as Adobe saw its revenues decline 21% in the period that ended August 21st.. I don’t know about you but personally, I’d stay away from a company that seems to be this desperate..
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