Yahoo also reported that it's writing down $482 million
in charges related to the declining value of Tumblr,
the social-blogging service that Yahoo acquired for
$1.1 billion in 2013.
and the company is writing off $7.6 billion related to
its acquisition of the Nokia phone business. That's more
than the $7.2 billion Microsoft paid for Nokia's phone
business last year.
Public companies "do some math", but that doesn't mean their math is always right. Acquisitions are bets, and bets don't always pay off.
It seems you're pointing out the obvious: that no investment 100% guarantees any sort of return. Surely "the math" discussed internally at Walmart includes both:
1) A calculation of risk/reward on this investment
2) Determining whether result of 1 appropriately reflects Walmart's risk profile.
Given that Walmart decided to acquire, it is safe to assume this investment's risk of loss falls within Walmart's investment profile.
My own observation is that the bets hardly ever pay off. Microsoft/Nokia is a great example but there are plenty of others. Maybe it's just confirmation bias, but I have trouble thinking of one counter example.
Adobe did buy AEM "when i was little" (you know, for like 20M or something I have no idea) and it has grown to 10x as much. However that is purchasing a smaller company...kind of like venture capital investment I guess. there seem to be plenty of examples where buying companies hasn't worked out (yahoo+tumblr comes to mind, and that's only recent news).
Sorry, not familiar with the acronym AEM. But you do give me an opportunity to modify my statement - it seems that the larger and more strategic the acquisition seems, the more likely it is to fail. And even when it doesn't fail, the synergies never seem to gel - what news of Zappos lately?
