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Eric Savitz at Tech Trader Daily (Barron’s):
Microsoft (MSFT) disclosed in an SEC filing on Friday that it has sold its entire 7.3% stake in Comcast (CMCSA) Class A common stock. Microsoft had owned 150,935,575 shares.
In a research note this morning, Bernstein Research analyst Craig Moffett notes that Microsoft’s initial $1 billion investment in Comcast came in June 1997, triggering “a monumental cable rally, one that arguably lasted almost ten years.”
The point apparently was to boost adoption of Microsoft set top boxes in the cable TV industry. How’d that work out?
As Moffett notes, the initial investment included a commitment from Microsoft to buy set-top boxes from Microsoft. He says Comcast in 2004 “dutifully” bought 500,000 boxes, “and then reportedly left most of them to molder in a warehouse.” Comcast also licensed a Microsoft programming guide. By 2007, he adds, Microsoft’s software was deployed in just a single Comcast market – in Seattle, near Microsoft HQ in Redmond. And in May 2007, Comcast pulled the plug on even that system, switching to its own home-grown guide.
Today, Microsoft’s largest TV software client is Comcast competitor AT&T (T). “Twelve years after their initial Comcast investment, Microsoft’s vision of a Windows-based gateway to the television still hasn’t materialized,” he writes. ”
You have to know when to hold them and when to fold them and there is nothing like a recession to clarify perceptions in that regard.
Comcast is not unexpectedly looking for the best price on the eyeballs of its cable ISP customers:
Microsoft Corp., Google Inc., Yahoo Inc. and Time Warner Inc.’s AOL are bidding to provide search technology and manage online advertising for Comcast Corp.’s Web site, a source familiar with the matter said on Monday.
Comcast.net, which received almost 17 million unique visitors in February, currently uses Google’s search engine service, but the three-year contract expires at the end of 2007. The site has only experimented with advertising in the past.
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The site is among Google’s biggest individual sources of search queries, from which it generates search advertising revenue. Google is expected to pay Comcast around $70 million this year under its existing contract, although that could top $100 million, the source said.
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Comcast will expect whoever wins its advertising contract to be able to handle its growing online video advertising inventory, including The Fan, which is its collection of entertainment clips. It has also launched new video sites, including Ziddio, which allows users to upload their own videos and Fearnet, a horror TV channel and video Web site.
I’ve seen this billed in some accounts as a rebuff to Google, but it’s rather a simple business decision to try to get the best price. Wouldn’t you?
And now for some breaking news from MSNBC: Microsoft doesn’t know jack about media.
Unlike the nascent move towards content creation by competitors Yahoo! and Google, Microsoft raised the last of its media white flags Friday, agreeing to sell a controlling stake in MSNBC to the eponymous other half of the cable news partnership.
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The MSNBC investment marks another in a long line of failed content forays by Microsoft, which has spent billions, particularly through investments in cable companies, attempting to diversify its revenue stream — but to no avail.
Also mentioned are AT&T Broadband, Slate, and Expedia. There is some backhanded praise for the serendipitous investment in Comcast.
Deborah Yao from the AP – Comcast, Google Said in Talks Over AOL:
Comcast Corp., the country’s largest cable TV company, is teaming up with Internet search leader Google Inc. in talks about taking a stake in Time Warner Inc.’s AOL Web portal, a person familiar with the discussions said.
Comcast, Google and Time Warner are discussing a possible deal under which the three companies would form a new entity through which they would jointly own the Web portal, according to the person, who asked not to be identified because release of the information was not authorized.
The potential deal could derail separate talks that have been reported between AOL and Microsoft Corp., which is believed to be interested in an alliance between AOL and Microsoft’s MSN, another major Internet portal.
Any deal between AOL and MSN could threaten Google, since AOL is major contributor to Google’s thriving Internet ad business, accounting for 11 percent of Google’s $2.6 billion in revenue during the first half of this year.
Richard Parsons, Time-Warner’s CEO, says this is merely a “market rumor.”
