“As Microsoft continues to press its takeover bid for Yahoo, Microsoft’s shareholders might be interested to know more about the deal-making history of Microsoft’s chief executive, Steven Ballmer. According to an academic paper that looked at ‘serial acquirer’ chiefs, Mr. Ballmer’s early track record for creating value through acquisitions was pretty dismal,” Andrew Ross Sorkin blogs or The New York Times.
Sorkin reports, “But the working paper, whose lead author, Richard Roll, is a professor at the UCLA Anderson School of Management, also gave a reason to be hopeful: It found evidence that chiefs who make value-destroying acquisitions early on can learn from their mistakes, improving the returns for shareholders in subsequent deals.”
MacDailyNews Take: Richard Roll? Yeah, right, Sorkin. We’re not falling for it this time! Everyone, it’s very important that you watch this short video now.
Sorkin continues, “Called “Learning, Hubris, and Corporate Serial Acquisitions,” the February 2007 paper examined 2,589 chief executives during the period between 1992 and 2002. Out of those, 1,424 chiefs oversaw at least one acquisition.”
“Mr. Ballmer was considered a “hubris-infected” chief under the study’s definition, because of Microsoft’s value-destroying deal to invest $100 million in Vertical Net in 2000. He followed up with deals for Intertainer and BroadBand Office, which also generated below-market returns for shareholders,” Sorkin reports. “In all, Mr. Ballmer made 15 deals between 2000 and 2002, with an average market-adjusted shareholder return of negative 4.59 percent.”
Full article here.
MacDailyNews Take: Steve Ballmer is an excellent CEO, heh, who is making the right decision to go after Yahoo, heh heh, as such an acquisition can only provide wondrous, hee hee! ha ha!, and magical, *snort!*, HA! HA! HA! HA!, ahem, synergies to… aww, forget it. We tried.