The Street continues to question the deal price of Microsoft‘s (MSFT) announced intention to acquire privately held corporate social networking startup Yammer for $1.2 billion.
As I mentioned this morning, Oppenheimer & Co.’ Shaul Eyal, who rates Microsoft shares Outperform, is nevertheless uncomfortable with the purchase price.
He’s joined this morning by Morgan Stanley’s Adam Holt, who reiterates an Overweight rating but questions the validity of the purchase price:
Yammer’s rev. run rate is small at ~$25m in CY11, which makes this deal look very expensive (~20x) even with synergies vs the Skype deal last year at ~8x NTM revenue, and we are not entirely comfortable that Yammer’s price of $1.2B is the best use of MSFT’s capital. While we think the enterprise social space is highly strategic and complementary to MSFT’s core business, and believe Yammer will provide a growth driver that can be integrated into both Sharepoint and Office, it is hard to justify a multiple over 20x rev. and there are several other social assets that are more strategic and have greater scale.
Holt doesn’t say what those other assets that are more strategic might be.
Yammer competes with corporate social offerings from the likes of Salesforce.com (CRM), Tibco (TIBX), and Jive Software (JIVE)
Microsoft shares today are up 16 cents, or half a percent, at $30.02.
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