Thursday, July 29, 2010

DST M ICQ: SNS opportunities and pitfalls?



Recently, with the Russian investment company Digital Sky Technologies (abbreviated DST) to 187.5 million U.S. dollars to buy AOL's instant messaging service ICQ, this Russian investment company again became the focus of the industry. Because in addition to the acquisition of ICQ, the company also invested in Facebook, Groupon and Zynga and other SNS class website. This forced people to admire the strategic vision of DST because of its investment in the current three SNS website to read, they are a good momentum of development of SNS sites, and represents the current model of development different SNS website.

Because SNS rapid development momentum, it could be the next in the Internet boom, but also attracted investors and some M & A's attention. Such as the recent stir-fried mobile location-based SNS social networking service Foursquare is facing such a situation. Alleged that Yahoo, Microsoft and Facebook are interested to deal Foursquare, which has particularly among the most likely Yahoo acquisition. However, in addition to the acquired foreign, Foursquare can also choose to continue to attract investment to continue to expand their scale of independent development. This raises a question of SNS site development model, namely, at the outbreak of the period, but in urgent need of funds to maintain the development momentum of the SNS website is to choose whether to support the independent development of investment companies, or to be the way forward then M ?

Back to M & ICQ DST, when the industry will focus on the time together in DST is not difficult to find DST has a soft spot for the SNS class website. From its investment in Russia and implementation of local business to see, almost all associated with the SNS. This at least shows from an aspect of their mode of recognition for the SNS, and this recognition is reflected in its more smooth by the SNS in accordance with the natural development of their own inherent characteristics, such as its investment now has 5% of the shares of Facebook, allegedly, DST almost do not interfere with their specific business, so Facebook can maintain rapid growth and it also has a great relationship. The contrary, the seller of this ICQ AOL, ICQ its original merger was supposed to be like to take this to increase the impact of its website, and not as an independent business to develop, it is bound to face external competition when the business setback or conflict with established businesses when AOL, ICQ services will be placed in a secondary position, and even change the original model of development, the end, AOL had 287 million U.S. dollars to buy the ICQ, including ICQ team of 120 million acquisition costs of additional dollars to 187.5 million U.S. dollars today only sold DST.

Also AOL, ICQ in addition to selling things, it also faces the sale or closure of nearly two years ago to spend 850 million U.S. dollars in cash acquired social network Bebo. Original, AOL hopes to boost its advertising revenue through the website of other traffic, while using AIM and ICQ instant messaging services to promote the two Bebo in the United States market. But in Facebook, under the impact of SNS sites, Bebo's U.S. customers has been steadily reduced. Market research firm comScore said, Bebo users from the United States last year's 5.8 million reduced to 5.1 million, well below the 350 million Facebook. If AOL choose to sell it, reported the acquisition price is only half of the original. From the ICQ and the forced sale to Bebo dilemma facing today, it is not hard to see, AOL had to spend huge sums of two acquisitions with SNS websites are not escape nature, at least not in the hands of AOL to grow.

Perhaps it is in view of AOL's warning, when Yahoo For M & A Foursquare, the industry once the Foursquare is for Yahoo if the bag, then it will lead to disastrous AOL merger. Moreover, Yahoo has been before the defeat of the criminal record of such acquisitions.

In fact, M & ICQ from DST DST and AOL in the lead see, is undeniable that the two sides have had promising prospects for SNS, but the result was quite different. DST investment in the development of its peak SNS website (such as Facebook, Groupon and Zynga), means that the benefits for investors, and AOL's ICQ and Bebo initial acquisition are already being forced to sell or for sale, and the price is much lower than the original purchase price, the most fundamental is that this merger has also delayed, or even destruction of these SNS development. This is undoubtedly an inspiration to the industry, although the development of SNS in full swing, investors, and the enterprises have to see it the future with great opportunities, but investors (including mergers and acquisitions) and SNS enterprises themselves, to each other, make the right choice, not only Investors will decide the fate of the enterprise itself will decide the future of SNS, as there may be opportunities for the opposite trap.







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