The news of FAST being acquired by Microsoft comes as no real surprise. There has been speculation for a couple of years. The search engine company, after a growth tear, stumbled financially last year, and has been operating as a trimmed down company for most of 2007. A 40% price premium had to be too hard for FAST shareholders to turn down.
I’ve had the pleasure of working with FAST as a business partner for ~3 years. It’s a quality company, with a search engine technology and talent pool that is truly world class. The past year has seen the loss of some great talent from the company, but they remain with a strong foundation, and an impressive enterprise and publishing client base.
How should a FAST local media client look at this?
Well, first off, the deal will not close for a few months, and Microsoft is not the swiftest at new product planning and integration, so expect little impact in the short term.
The main impetus for the acquisition looks enterprise driven, not media; the Microsoft executive commenting on the acquisition is Jeff Raikes, President of the Microsoft Business Division. This is reinforced through the blog insights of an “ex-insider”. Witness the FAST CEO, John Lervik’s quote:
“By joining Microsoft, we can benefit from the momentum behind the SharePoint business productivity platform to really empower a broader set of users through Microsoft’s strong sales and marketing network. It validates FAST’s momentum and leadership in enterprise search.”
There’s good news / bad news here. I would expect this to be less disruptive to existing client implementations than if it was integrated with Live Search, but I’d also be concerned that the innovation focus narrows to enterprise versus media.
I think FAST really began turning towards an enterprise centric product plan a couple of years ago, and started to place less emphasis on the unique needs of media publishers. This new parent will probably puts the focus even more tightly on large enterprise client needs.
Questions running through my head
Once the dust settles and the macro plan is in place, I’d want to know:
- How do you plan to retain the excellent R&D talent pool?
- What commitment and support will be in place for:
- Mobile Search
- Ad Momentum
- Crawling/content infrastructure tools
- What approach will you take to professional services? (an area of churn and confusion over the past couple of years)
- What will be the license model going forward?
The embedded search engine tech space is getting more ripe with choices these days. Lucene has progressed very well over the past couple of years, plus many specialized engines like Apptus and Exalead seem to be gaining investment and momentum. The base level of search functionality needed for IYP sites is reasonably well served today by many technology companies. However, the space will continue to evolve and - for now - FAST remains the most obvious choice where scaled R&D and “enterprise class” technology are critical buying criteria.
[…] Here’s the full official PR blurb from the FAST website: Microsoft Corp. (Nasdaq: “MSFT”) today announced that it will make an offer to acquire Fast Search & Transfer ASA (OSE: “FAST”), a leading provider of enterprise search solutions, through a cash tender offer for 19.00 Norwegian kroner (NOK) per share. This offer represents a 42 percent premium to the closing share price on Jan. 4, 2008 (the last trading day prior to this announcement), and values the fully diluted equity of FAST at 6.6 billion NOK (or approximately $1.2 billion U.S.). FAST’s board of directors has unanimously recommended that its shareholders accept the offer. In addition, shareholders representing in aggregate 37 percent of the outstanding shares, including FAST’s two largest institutional shareholders, Orkla ASA and Hermes Focus Asset Management Europe, have irrevocably undertaken to accept the offer.The offer will be subject to customary terms and conditions, including receipt of acceptances representing more than 90 percent of FAST shares and voting power on a fully diluted basis, and receipt of all necessary regulatory approvals on terms acceptable to Microsoft. The complete details of the offer, including all terms and conditions, will be contained in the offer document, which is expected to be sent to FAST shareholders during the week of Jan. 14, 2008. The transaction is expected to be completed in the second quarter of calendar year 2008. Goldman Sachs International acts as financial advisor to Microsoft; Merrill Lynch International acts as financial advisor to Fast Search & Transfer. Please Note: I worked for FAST from June ‘05 to Sept ‘07 and mainly on the AdMomentum product - see TC piece over here for more on that adventure. Follow Notes: worth checking the post on Evan’s Ink - “fast and soft” re: this deal. This story is great for titles - Mr Battelle’s is Microsoft Acts Fast… […]
Left by Microsoft is Buying FAST « A Fuller View on January 8th, 2008