Why Microsoft should buy DoubleClick

Microsoft is reportedly one of the suitors for online advertising network DoubleClick.

As reported on WSJ.com, DoubleClick's owner--private equity firm Hellman & Friedman--is looking to cash out for roughly $2 billion. The firm acquired DoubleClick in 2005 for $1.1 billion.

There are plenty of options for DoubleClick and it could go public again, but a Microsoft purchase would be intriguing.

Here's why:

• DoubleClick, which serves ads and tracks them, would bolster Microsoft's Adcenter, which is lagging behind both Google and Yahoo. With DoubleClick, Microsoft would have a suite of advertising services and software. And we all know how Microsoft just loves suites.
• DoubleClick would give Microsoft a big chunk of the online advertising market. Redmond's biggest worry is that the software industry will move to ad-supported applications and leave it in the dust. With DoubleClick, Microsoft would at least capture some chunk of the online advertising market.
• DoubleClick would bolster Microsoft's management ranks. Why is Microsoft so far behind in online advertising? It doesn't have the expertise that Google and Yahoo have. DoubleClick could change that a bit--assuming managers stayed with Microsoft of course.
• DoubleClick needs a partner. The Journal is reporting that Google will announce a DoubleClick-ish service in upcoming weeks. If you're DoubleClick and that oncoming train is Google why wouldn't you find a big brother like Microsoft?

It's unclear whether Microsoft would pull the trigger on a big deal, but it may add up. Consider the options for Microsoft. It could buy Yahoo in an expensive deal. It could continue to invest in online services that aren't getting traction. Or it could take the middle ground, which would be acquiring DoubleClick. 

AG Edwards analyst Kevin Buttigieg sums up the situation in a research note:

"DoubleClick provides a web-publishing platform for Internet ads that we believe would provide a boost to Microsoft's online services ambitions which have so far been lackluster. According to the (WSJ) article DoubleClick is seeking at least a $2 billion valuation and has about $150 million in annual revenues. This would be far less a purchase of Yahoo! by Microsoft which has been long rumored and feared by investors, though Yahoo! has a much broader portfolio that DoubleClick."