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The 'DoubleClick Dividend!'

When is a $3 billion company really worth $6 billion? When you're Microsoft, looking for some kind of answer to the Google online advertising juggernaut, and still licking your wounds after losing the billion-dollar bidding war for DoubleClick.

Which leads us to Microsoft's mega-merger with aQuantive, offering an 85% premium to yesterday's closing price. It's a bold move, a pricey move, a move Microsoft had to make, but not surprising given what's been happening in the online advertising world these past few weeks.

Google started it all with its $3.1 billion bid for DoubleClick. And while competitors quickly lined up against the company, crying "anti-trust," and asking for a Justice Department investigation, behind the scenes, they were looking for deals of their own.

AQuantive, ValueClick, 24/7 Media, Right Media. They were all immediately in play, and they started dropping like flies. Yahoo does a $680 million deal for Right; WPP snaps up 24/7 just yesterday for $679 million. And now aQuantive.

Microsoft finally wins one, but it comes at a steep price, and that's where the "DoubleClick Dividend" comes in. Had Microsoft beaten Google to the punch and done this deal earlier, it could have saved billions. Instead, it continues to play a game of follow-the-leader and it's gonna cost 'em.

"Look, do I think aQuantive is a silver bullet that's going to change this in one shot: no," says Charles DiBona, the Microsoft analyst at Sanford Bernstein. "Do I think it makes Microsoft a more viable competitor in the space: yes. There has been a lot of question in what Microsoft has to do here."

Pacific Crest's Brendan Barnicle agrees: "[This] certainly makes things more interesting. Microsoft has struggled in this area for so many years, that if we can see them have some success here, it would be a great thing for the company and, frankly, a great thing for the stock."

But that's a big "if." Microsoft was quick to point out that the emphasis on this deal would be "integration." Yusuf Mehdi, Microsoft's chief advertising strategist, called me this morning to go over details of the deal, telling me, "If you look at the broader landscape, this is quite a plum 'win' for us. The online advertising market is white hot. $40 billion, growing 20% year-over-year for the foreseeable future -- and there's $600 billion in overall advertising on a worldwide basis. It's breathtaking. It's just a hot opportunity. There's room for a couple of big players and we intend to be one of them."

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He also brushed aside any integration issues. If Microsoft is 1,3,5,7, and 9, he says aQuantive is 2,4,6,8, and 10.

"One of the reasons we're super-excited about aQuantive, we've had a multi-year relationship with them on a commercial basis with their technology. We're very deep in how the technology works, we know the engineers, the platforms and we're very sympatico on that level," says Mehdi. He says engineering teams are geographically and technically "very close," with "a lot of mutual respect for each other on both sides. It isn't like we bought a company we never heard of before."

That's if the company is successful in integrating the disparate aQuantive businesses into key Microsoft initiatives like "Live," "MSN" and many others. Microsoft simply hasn't been able to come up with any effective formula in trying to take on Google, or even trying to stake any kind of meaningful claim in the online advertising market, which is tech's version of the "Golden Goose" right now -- and Google owns the gaggle.

"They're talking about bringing in an entirely new set of people, products and businesses that they haven't had previously, and trying to integrate them with the products that they have had that haven't been all that successful, so there's a good chance -- a good risk of failure -- with this," Barnicle tells me.

Mehdi is also excited about finally winning one after losing the bidding battle for DoubleClick. "AQuantive and DoubleClick are different kinds of businesses. Clearly we'd be interested in both kinds of businesses, but this one is unique," he tells me. "We feel exceptionally good that we won the competitive bidding process to get aQuantive. That's a big positive."

Says Bernstein's DiBona: "I think it's a big deal in the sense that it shows the willingness of Microsoft with a select, few, key assets they think are important for their internet strategy to be aggressive and really pay up for those assets and make sure that they get them. To make sure they don't get snapped up by someone else."

That's something Microsoft seems determined not to let happen again. And with tens of billions in cash left over after a deal like this one, competitors ought to take note. Microsoft is cracking open the checkbook and dipping into the war chest.

Now the attention shifts to one of the other key players in this sector: ValueClick, which rose 11% in sympathy (celebration?) of the aQuantive deal. But that performance is leading to a bit of head-scratching on Wall Street. Google's got Doubleclick; Yahoo's got Right Media; WPP took out 24/7 and now Microsoft will buy aQuantive. That kind of leaves ValueClick without a chair now that the music is stopping. But Barnicle thinks there might be value to an independent ValueClick.

"The company that remains independent -- the one that remains standing -- actually does a whole lot better than its peers in the near term, because its peers end up so consumed with the integration and merging of products, that whoever who can standalone, focus on their business -- those people tend to do very well," Barnicle tells me. "Despite concerns on ValueClick as an independent, they may in some ways see their business accelerate."

Oh, and the rumor about a Microsoft deal to buy Yahoo? With the aQuantive purchase now on the front burner, anything with Yahoo is more of a long shot than ever before.

Questions? Comments? TechCheck@cnbc.com