By Michele Gershberg and Anupreeta Das
NEW YORK/BOSTON (Reuters) - Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) bid for Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) indicates an acquisition hunger that could prompt it to gobble up a chain of smaller companies, venture capitalists said on Wednesday.
VCs participating in the Reuters Global Technology, Media and Telecoms Summit see new deals for the next 12 to 18 months fueled by the few sectors that appear resilient to valuation concerns, such as alternative energy and social networks.
For Microsoft, the aim to compete for the Internet advertising behind Google Inc's (GOOG.O: Quote, Profile, Research, Stock Buzz) growth may take it beyond its pursuit of Yahoo. Microsoft pulled a $47.5 billion offer to buy Yahoo earlier this month and has been discussing alternative deals with the Web company.
"If they can't buy Yahoo, they're going to do whatever it takes to dominate that space," David Chao, co-founder of DCM, said in a panel discussion between New York, San Francisco and Boston. "There's a whole value chain of companies in between that eventually they're probably going to buy."
Navin Chaddha, managing director of Mayfield Fund, said the hype over social networks may not be overstated. Advertising in the sector is expected to grow to $2 billion this year from $1.2 billion in 2007, he noted.
"It's going to be mainstream, it's going to be ubiquitous, it's where people are going to hang out," he said. "There's going to be scarcity value. The next Yahoo, the next Google ... are going to be created. If you have this kind of scale, you are bigger than any TV network."
FACEBOOK: RIDING OR BREAKING THE WAVE?
But Chaddha still advises start-ups and their investors to take a wider margin of error when it comes to the amount of time it will take to cash in on the business. Continued...
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