Might Microsoft Want Sci-Atlanta?
Consumer electronics types such as Sony Corp. (NYSE: SNE) were the favorites, and (NYSE: ALA; Paris: CGEP:PA) got a mention as possibly looking to defend its turf against Cisco. And there's been talk that at least a couple of these parties were prepared to bid more than Cisco. (See Scientific-Atlanta: Cisco's Sweet Deal?)
But how about Microsoft Corp. (Nasdaq: MSFT)? The New York Post reported early this week that the Redmond empire was mulling its own bid for Scientific-Atlanta.
The theory is attractive, because Microsoft wants the PC (or maybe the Xbox) to dominate the digital home -- and its reign could be threatened if Cisco gets its hands on such a large chunk of the set-top market. Cisco was already headed towards home networking anyway, via the July acquisition of KiSS. (See Cisco KiSSes Up to Telco TV.)
At least one analyst remains unconvinced. In a report issued yesterday, Nikos Theodosopoulos of UBS AG writes that Microsoft has publicly said it would consider "up to $2 billion" in acquisitions per year. Scientific-Atlanta's price tag runs closer to $7 billion.
Moreover, Microsoft wouldn't necessarily want Scientific-Atlanta's infrastructure and systems integration businesses. And because it's peddling IPTV middleware, Microsoft's ownership of Scientific-Atlanta's set-top boxes might create conflicts of interest that could have carriers tuning out. "Both these factors also suggest to us that a bid is unlikely," Theodosopoulos writes.
So, maybe it won't be Microsoft that starts the battle over Scientific-Atlanta. The Cisco acquisition isn't likely to close until after January, so there's plenty of time for someone else to make a bid.
— Craig Matsumoto, Senior Editor, Light Reading