Microsoft's sale of Razorfish, its digital marketing agency, to Publicis Groupe is yet another sign that Redmond is seeking to refocus its mission around its core properties, such as Windows 7 and Office 2010. Microsoft originally purchased Razorfish as part of a $6 billion acquisition of aQuantive in 2007, when it was seeking to expand its online advertising platform.
sale of Razorfish, its digital marketing agency, to French advertising agency
Publicis Groupe is yet another sign of the Redmond,
Wash., company's strategic refocusing on
its core businesses. With the $530 million deal, announced Aug. 9, Razorfish
joins other Microsoft properties that have been sold or eliminated over the
course of the summer.
"We are grateful for the contributions that Razorfish has made to our
online advertising business since joining the company as part of the aQuantive
acquisition in 2007," Microsoft CEO
Steve Ballmer said in a statement. "We look forward to continuing to work
with Razorfish as one of our agencies."
Razorfish will continue to operate under its brand name, with its management
team left intact. Under a Strategic Alliance Agreement, clients of Publicis
Groupe will be able to purchase "display and search advertising from
Microsoft over the five-year term of the agreement on favorable terms,"
according to a joint statement released by both companies.
Rumors of a pending Razorfish deal first surfaced in a June 29 report by the
Financial Times, which said that Microsoft was using Morgan Stanley to find a
suitable buyer. The report quoted an analyst as estimating Razorfish's value
between $600 million and $700 million "based on sales of about $400
[million] last year."
Publicis Groupe was mentioned at the time as a potential purchaser.
Microsoft had originally purchased Razorfish as part of a $6 billion
acquisition of aQuantive in 2007, at a time in which Redmond
was looking to expand its online advertising platform. Other properties in
aQuantive's stable included Atlas, which offered advertising and publishing
tools, and DrivePM, which matched ad campaigns to publisher inventory.
Microsoft's hope was to create an Internet-wide advertising platform that could
compete head-to-head against offerings by Google and other competitors.
Microsoft has taken some economic hits since that time
. The company's most
recent financial results saw a 17 percent decline in year-over-year revenue for
the fourth quarter of 2009, with earnings of $13.10 billion-undershooting Wall
Street estimates by more than $1 billion. The continuing economic recession has
driven down PC sales, in turn reducing the demand for Microsoft's core
Over the course of the summer, Microsoft has shed several programs and
applications viewed as extraneous as it seeks to bolster its key businesses. On
June 11, it announced that Money
Plus, its personal finance software, would no longer be sold
; this followed
an earlier announcement that Encarta,
its encyclopedia application, would be shut down
in the face of increased
competition from Wikipedia and other free, collaborative reference sites.
Popfly, Microsoft's 2-year-old programming tool for nonprogrammers,
likewise placed on the executioner's block in July 2009, the company wrote in a
statement, "Like many companies, the economic situation has caused us [to]
refocus and to reevaluate our priorities; while successful and popular, Popfly
is not part of our refocused strategy."
has devoted itself to the rollout of Windows 7
, its new operating system,
on Oct. 22. It is also focusing on core consumer platforms such as Office 2010,
which, in a bid to make it more competitive against cloud-based offerings such
as Google Apps, will be offered in a free online version.
Razorfish, evidently, did not seem to fit within Microsoft's refocused