Microsoft reportedly selling Razorfish

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Microsoft has hired Morgan Stanley to sell its digital agency Razorfish, according to reports.

A Microsoft spokesperson would not comment on what she called “speculation.” Razorfish laid off 4% of its staff back in February, which the agency attributed to the recession.

“This may be Microsoft trying to shed something that doesn't fit into their business model after the aQuantive acquisition. Doing it while it is in demand makes sense,” said Sean Corcoran, analyst, interactive marketing at Forrester Research. “Microsoft is a publisher and a technology company, they are not an agency — and it could be a conflict of interest to own one of the biggest digital media buyers and be buyer and seller at the same time.”

According to the Financial Times, French advertising group Publicis Groupe SA is a potential bidder, but Publicis did not return calls for comment. FT said the deal could fetch $600 million to $700 million. In December 2006, Publicis Groupe purchased digital agency Digitas for $1.3 billion.

“This would put Publicis in a very strong position in the marketplace for digital and may make them the most well-positioned holding company for digital, with Digitas already in their umbrella,” said Corcoran.

Microsoft purchased Razorfish, formerly called Avenue A/Razorfish, in May 2007, as part of its $6 billion acquisition of aQuantive. Razorfish handles the digital work for brands including Mercedes, Ford, Coca-Cola, Kraft, Levi Strauss & Co., AT&T and Starwood Hotels.

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