Google Inc.(NASDAQ:GOOG) purchased Android for a tiny amount of US$50 million back in 2005. It must be regarded as one of the best investments to date. Android is now the leading OS worldwide, powering 80% of all smartphones and generating billions of dollars in revenue for the company in app sales. In contrast, the purchase of Motorola by Google for a whopping US$12.5 billion in 2011 might have been a serious miscalculation. Motorola was again sold to Lenovo for just US$2.9 billion, and 4000 workers lost their jobs.
Such is the nature of acquisitions in technology sector. In Q1 2014, the total global volume of tech companies reached an eye-popping US$756 Billion. Sometimes acquisitions turn out to be pure duds, such as Microsoft Corporation (NASDAQ:MSFT)’s acquisition of Hotmail in 1998 for an estimated US$500 million. It was meant to serve as a safeguard against AOL mail and Yahoo mail, but was removed by May 2013 and replaced by Outlook.com. Apple Inc. (NASDAQ:AAPL)’s acquisition of NeXT technologies for US$429 million was a double boost for the company, as Steve Jobs returned to the company and NeXT operating system became the foundation of OS X.
Some acquisitions involve eye-popping amounts of money and the benefits may be planned for the long-term, such as Facebook Inc.(NASDAQ:FB)’s acquisition of WhatsAppp for US$19 Billion. Other purchases are mere safeguards against the competition.
Top acquisitions in tech
Finances Online.com highlights some of the biggest acquisitions in technology sector so far in the infographic below.
- Facebook’s acquisition of Whatsapp was the fourth biggest acquisition of 2014.
- Since 2010, there have been more than 2500 acquisitions every year, with the highest at 2936 in 2011.
- In 2013, the merger of Dell and Silver Lake was valued at US$24.4 Billion, while the merger of Sun Microsystems and Oracle was valued at US$7.4 billion.
- Google bought Nest technologies for US$3.2 Billion in 2014, with the goal of collecting data on activities done at home. It paid just half that amount in shares to buy Youtube, which now generates an annual revenue of US$4.3 billion.
- Microsoft’s acquisitions haven’t done much good for the company. Skype was bought by the company for US$8.5 billion in 2011, but generated just US$2 billion in revenue in 2013. It’s too soon to tell if the US$7.2 Billion acquisition of Nokia will pay off.
- In the past five quarters, Apple reported acquisitions totalling US$11.12 billion. All of Apple’s major acquisitions, including NeXT technology, Siri voice technology, Authentec computer and mobile security, have been under US$500 million.
- Facebook purchases startups to allow entrepreneurship to grow. Its biggest purchases included Whatsapp for US$19 Billion and Oculus 3D technology for US$2 Billion.
- Instagram, which Facebook bought for US$1 billion, is now growing faster than YouTube or Twitter.
