Even though the $US6 billion price tag on Microsoft's acquisition of digital advertising vendor aQuantive is nearly twice what Google paid for DoubleClick last month, analysts didn't see the move as a sign of panic on Microsoft's part.
"This wasn't a panic move," said Allan Krans, an analyst with Technology Business Research. "There certainly was a sense of urgency, but not panic."
David Smith, Gartner's lead analyst on Microsoft, also refused to stick the p-word onto the purchase -- the largest in Microsoft history. He put more emphasis on the contest between Google and Microsoft. "You have to take this in the context of all the other deals," Smith said. "Microsoft was beaten out by Google on DoubleClick, in the  bid for a stake in AOL, and on the  ad deal for MySpace. In every case, Microsoft was outbid. This time they wanted to make sure they were not outbid."
Talk of a panicked buy was fuelled in part by questions about the price. Krans blamed the last two months' online ad deals -- DoubleClick to Google, the remainder of Right Media to Yahoo, 24/7 Real Media to WPP Media Group -- for driving up aQuantive's value.
During an early morning conference call, several financial analysts asked Microsoft executives to explain and defend the $6 billion, all-cash deal. "We believe it is definitely the right company to buy," said Chris Liddell, Microsoft's CFO, "and hence we're willing to pay the value we're talking about today."
That price was high, Liddell acknowledged, because Microsoft was bidding against others. "Yes, it was a competitive bidding situation," he said without naming names.
While Microsoft executives refused to couch the acquisition as a reaction to Google -- there was no mention of the search and online advertising rival by name -- analysts weren't so shy. "Microsoft has tried to build this internally, but without a whole lot of results. And so the gap between them and Google became larger," said Krans.
"This is clearly designed so Microsoft can compete with Google," seconded Smith.
Both Krans and Smith said that aQuantive is a good fit for Microsoft, and may, in fact, more than make up for the loss to Google of DoubleClick. "This is competitive with [a possible] DoubleClick deal," said Smith. "aQuantive is an important missing piece for Microsoft, and a big step in the right direction."
"This gives them the tools to compete with Google," added Krans. "Microsoft has clearly determined that it doesn't have the time to develop a comprehensive ad platform and must make acquisitions. Google and Yahoo clearly have a head-start."