“The MSN Israel portal is presently a joint venture with Internet Gold.”
Microsoft Corporation, the world’s largest software company, announced on Sunday that it has reached an agreement to acquire the 50.1 percent stake it does not already own in the MSN Israel online portal from Internet Gold Ltd. for an undisclosed sum, and become the sole operator of the portal beginning in October 2008.
MSN Israel, which was formed in 2000, is 50.1% owned by the Internet Gold Group and 49.9% owned by Microsoft Corporation.
Internet Gold said it was giving up control of MSN Israel to Microsoft due to a change in business strategy. “We have decided recently to change course and seek alternatives for growth,” said Internet Gold CEO Eli Holtzman, in a statement.
“MSN Israel currently accounted for less than 3% of Internet Gold’s revenues in 2007.”
Microsoft and Internet Gold are presently talking about the terms of migration and possible future cooperation. The two parties reached an agreement for Microsoft to operate the internet portal independently from October without providing further details about the financial terms of the deal.
“From when we launched MSN Israel eight years ago, the online business world has undergone many changes, and what was right then does not necessarily make sense now,” said Danny Yamin, general manager of Microsoft Israel, in a telephone interview with The Jerusalem Post.
“We are planning to take some of the foundations established by the MSN portal and integrate our own Windows Live products to develop a better product, create more value for Israeli surfers and deepen our impact on the Israeli market.”
Yamin added that incorporating Windows Live services will pave ways for consumers to interact and engage with MSN and, more importantly, with each other.
“We call this ‘the social portal’. Content is a very important part of this strategy,” said Yamin.
Microsoft said Sunday that it will take operating control over MSN Israel, which is 50.1% owned by Israeli tech and communications investment firm Internet Gold and 49.9% owned by Microsoft.
“The MSN Israel portal will continue to operate throughout the transition period and the companies are working together to support employees, advertisers and users through this period,” the companies said in a joint statement.
“We are very much thrilled about our future in Israel and see some fantastic opportunities for growth and development of both the MSN portal and Windows Live services,” said Yamin, in a statement.
Meanwhile, reports were confirmed that MSN Israel general manager Shraga Mor is resigning and a third of the company’s personnel will be fired.
In response to reports that a third of the company’s staff will be laid off, Yamin said that part of the staff will be hired as Microsoft Israel workers.
“I hope that no one will be fired, but in these situations there are sometimes shake-ups,” said Yamin.
Mor confirmed the report about his departure. Deputy General Manager Zvika Sheinfeld will head the transition administration that will run the portal in its new format until it is re-launched under exclusive Microsoft ownership in three months. Internet Gold CEO Eli Holtzman will continue as MSN Israel chairman during the interim.
MSN is a global portal network which operates in 44 countries. In almost all of these countries the MSN portal is fully owned by Microsoft Corp., and only in a very few instances has Microsoft joined forces with a domestic partner to establish a local MSN portal.
MSN Israel was established in 2000 and became one of Israel’s top portals from the beginning. Like its U.S. counterpart, it features links to popular Microsoft services such as Hotmail, Messenger, and Spaces. Most of the content, however, is rendered in Hebrew and is tailored to its Israeli audience.
However, the portal has taken some severe hits recently, including waves of layoffs and a slump in its weekly exposure rate, which according to the monthly TIM/Teleseker survey was 25.3% in May, putting the portal in seventh place.
“We have been happy to partner with Microsoft in establishing MSN Israel over the last eight years. Since then, we have developed MSN Israel into a leading portal in Israel. Given the change in the parties’ online strategies we have agreed it makes sense for Microsoft to operate msn.co.il independently. We believe this is the right move for both parties, and anticipate it will have a positive impact on our results,” said Holtzman.
Holtzman added that the group had considerably expanded its activities in a variety of communications areas over the past couple of years and, as a result, the MSN Israel operations currently represented a minor portion of the group’s total revenues. In 2007, MSN Israel accounted for less than 3% of Internet Gold’s total revenues.
“Thus, we have decided recently to change course and seek alternatives for growth,” said Holtzman. “We are continuing to actively examine new and financially significant areas of activity in and out of Israel, which have substantial growth potential and will drive our group to its next phase of business.”