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That's an unreasonably high estimate, and there is some data to support the idea that it's unreasonable[1].

Microsoft has been losing, at most, a few billion[2] a year on Bing. Assuming they've spent $45B since 2009, that's $6.4B per year spent on Bing. A net loss of $2B on Bing would mean Microsoft is making $4.4B per year, which isn't in the ballpark.

1. http://www.businessinsider.com/chart-of-the-day-microsoft-on...

2. http://hal2020.com/2013/01/18/about-that-2b-annual-loss-from...




Even if the real number is only in the $20-30B range I'd still consider that "in the neighborhood" as I said. And they would have had a much stronger start by not having to build a brand from scratch.


I take your point, but I want to add a couple more things.

Buying a company costs a lot more than the purchase price. Due diligence, regulatory compliance, legal expenses, HR expenses, lost productivity due to changes, employee turnover, and other factors put a huge premium on top of that price.

Plus, a company that you buy has its own cash-flows, assets, and liabilities, and those might be costly, too. It's not always a good idea to buy a ship that's slowly sinking.

I think Microsoft has done incredibly well without Yahoo, and it's also using Bing in interesting ways that don't require direct competition with Google (powering Cortana, for example).


You forgot break-off risks related to the buyer.




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