Microsoft to acquire Web ad exchange

Microsoft to acquire Web ad exchange

	Published : Thu, 26 Jul 2007 23:41 By : Agencies Print this Story

REDMOND, Wash. (AP) - Microsoft executives brushed off analysts' doubts about its effort to diversify beyond its bread-and-butter Windows and Office programs, saying it's merely embracing a shift in the software industry.

Microsoft Corp.'s online strategy, from Web services to the future of the online advertising platform, took center stage in a morning of presentations at the annual financial analyst meeting Thursday.

Software 'is a business of disruption,' Chief Executive Steve Ballmer said. 'If that scares people, scares shareholders, they ought not be in our stock.'

Ballmer said analysts have 'hammered' him about whether Microsoft really needs to pursue such a wide variety of businesses, among them desktop and enterprise software, consumer electronics, search and online advertising.

The answer? Yes.

Microsoft announced an acquisition designed to round out its online advertising business. The software maker agreed to buy AdECN Inc., an exchange similar to the stock market where networks representing Web sites buy and sell ad space, for an undisclosed amount.

With the pending acquisition of aQuantive Inc., Microsoft will inherit the ability to sell ads across a network of Web sites. Owning AdECN will help Microsoft sell unwanted ad space on aQuantive network sites and its own properties, and may also increase what Microsoft can charge for in-demand ad slots.

Yahoo Inc. recently bought another ad exchange, Right Media Inc., for nearly $700 million.

Microsoft is taking aim at what it predicts will be an $80 billion market by 2010, but the company still lags far behind Google Inc. and Yahoo, which lead the field in search traffic and related advertising revenue.

Ballmer tried to spin the sizable gap into a positive, calling Microsoft's smaller position a chance to rethink the business model.

The CEO also said Microsoft is busy at work on a 'software plus services' model, which adds Web components to hefty desktop programs and connects PCs, mobile devices and Web services. However, Ballmer called the idea of software moving to an online-only model 'extreme and ridiculous,' and executives did not give details about the company's plans for Web-based word processing, spreadsheets and other Office programs.

With the Vista launch behind them, Microsoft executives spoke little about the operating system other than to tell analysts it shipped 20 million copies since mid-May, bringing the total since late January to 60 million copies.

Shares of Microsoft fell 73 cents, or 2.4 percent, to close at $29.98.