A Large Number, Even for Microsoft

By Peter Galli  |  Posted 2008-01-16 Print this article Print

But Directions on Microsoft analyst Matt Rosoff is more skeptical that the deal will take place, in large part because of the price Microsoft would likely have to pay for the firm.

"Microsoft will likely have to pony up around $6 billion for Logitech [whose current market capitalization was $5.46 billion on Jan. 15], which is a large number, even for Microsoft, and even for a well-established company that made about $230 million in profit on more than $2 billion in revenue last year. Overall, I don't think it's going to happen," he told eWEEK.

However, Microsoft did fork out about $6 billion last year to buy aQuantive, which only earned $14 million in profit on revenue of $140 million in its last quarter as an independent company, Rosoff said.

However, even though Microsoft has also historically favored organic growth on this front, that could be changing, he said, noting that "if Microsoft really wants to expand into consumer electronics by building more types of hardware, Logitech might be a logical place to start."

Enderle also said that Microsoft's hardware unit has been struggling, particularly as he believes that "in a software company like Microsoft, there just isn't a great deal of interest for folks to work on hardware, so they don't have a core to build off of."

Logitech, which has historically done better in this space than most of its competitors, including Microsoft, would give the software maker that core, he said.

Rosoff agreed, saying that while Microsoft Hardware has been around for a long time and consistently profitable. "if you remove the Xbox from the equation, then the Entertainment and Devices business unit, including hardware, is not growing very fast."

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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