Ad Deals Lacking Logic

So, why now? And why at inflated prices? The best explanation seems to be that it's all part of a grudge match between Internet advertising giants: Microsoft wanted DoubleClick, but Google swooped in and offered more. After licking its wounds, Microsoft paid twice as much for aQuantive. WPP wanted in on the game, and others like Yahoo! may follow.

Imagine you told your neighbor you were going to buy a Jaguar, and the next day you see one in his driveway. So, you go right out and spend twice as much on a Porsche. And now everyone on the block wants a luxury car. How would you feel? Vindicated, probably -- at least until it was time to pay the bill.

Of course, if you had more money than you knew what to do with, you wouldn't even worry about it. And that's what's going on right now. Having $35 billion in cash is reason enough to pay $6 billion for a company, or at least that's how Microsoft's executives seemed to justify it in a conference call.

But $6 billion for a company with $54 million in profit last year, and an estimated $71 million this year? That's a multiple of 111 times earnings and 85 times, respectively. No matter how hard you try to explain it, it's an investment that is speculation-driven, not value-driven.