Microsoft announced its biggest layoffs ever, and the underlying message is that buying Nokia was a mistake. Workers at the formerly-independent phonemaker will take the brunt of the cuts.
Google tried to buy its way into relevance as a smartphone maker by buying Motorola Mobility for $12.5 billion. They sold it off barely more than two years later for less than $3 billion. Late last year Microsoft bought Nokia’s handset division for $7.2 billion, and that has already turned out not to be worth much more than the prices of several thousand pink slips and severance packages.
These troubles are nothing unique to Google or to Microsoft — mergers & acquisitions are hard, and rarely work out as planned. And that’s if they work out at all. Ford and GM went on a buying spree of foreign automakers (SAAB, Jaguar, Aston-Martin, etc) and proceeded very quickly to drive them all into the dirt. It’s very difficult for a company to buy its way into relevancy in new markets. Ford had about as much business building Jaguars as Google did building its own smartphones.
When buyouts do work, it tends to be when a much bigger company is the buyer of a much smaller company, to gain needed technology or desired expertise, and then impose its own corporate culture on the buy-ee. Marriages usually work best as a partnership of equals; buyouts usually work best when one company completely loses its identity.
It’s an expensive lesson, but business leaders never seem to tire of learning it.