Autodesk Buys Socialcam: What's Wrong With This Picture?

In a surprising move on Tuesday, Autodesk (ADSK) revealed that it will pay roughly $60 million to buy social video-sharing specialist Socialcam.

Autodesk is the leading provider of design software for architects and engineers. Why snap up the maker of a controversial app that seems to have little to do with the company's core competencies?

"Mobile computing, the cloud and social media are improving and changing the way people design, engineer and create projects," an Autodesk executive explains in a statement revealing the acquisition. "Video is an ideal medium for professionals and consumers alike to communicate and share their design ideas."

This may all be true, but has the company noticed the flak that Socialcam has been receiving in recent months?

Socialcam or Socialscam?

Socialcam raced to the top of App Store best-seller lists earlier this year, and its viral success on Facebook (FB) made it a fixture on the leading social networking website.

Fans voiced the opinion that Socialcam would become the Instagram or Pinterest of video sharing.

Instead, the free application that allows users to upload, edit, and share video clips has attracted plenty of attention for the wrong reasons.

One knock came from the way that Socialcam acquired its content. Most of the more popular uploads on the site weren't original clips. They were simply trending videos on Google's (GOOG) YouTube that were copied over to Socialcam.

Then we get to the annoyance factor. Watching a Socialcam video on Facebook allows the app to let all of your Facebook friends know that you watched the clip. It's a neat viral idea in the abstract, but in reality, a lot of people would prefer not to clutter up their timelines with potentially saucy or silly videos.

Method to the Madness

The Socialcam deal doesn't make sense. Yes, the app has been downloaded 16 million times for iOS and Android devices, but what does this really have to do with Autodesk's business?

Cynics will argue that Autodesk is pursuing this deal because it's out of ideas.

The company has been consistent over the years. Analysts see Autodesk's revenue climbing at a 10% clip both this fiscal year and the next. Earnings are expected to grow at a slightly better rate than that. However, there's at least one sign that the party is winding down here. After blowing past Wall Street's profit targets for five consecutive quarters, Autodesk merely met analyst expectations in its most recent quarter. It may not seem like much, but it could be an early indicator that the market has finally caught up to Autodesk.

If anything, the market may have actually lapped Autodesk.

As the World Earns

You won't hear from Autodesk's bean counters in the coming days. The company's second fiscal quarter doesn't end until later this month, so the white-collar software specialist won't report again until late August.

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However, the same analysts who would routinely be huffing and puffing to catch up to Autodesk's better-than-expected bottom-line results are now starting to take steps back.

Wall Street's looking for a quarterly profit of 49 cents a share when Autodesk reports next month. Three months ago they were banking on net earnings of 51 cents a share. Analyst estimates for these next two fiscal years have also been scaled back a bit.

Earnings may finally be back to pre-recession levels, but why aren't the pros who follow this company for a living raising expectations instead of hosing them down?

It may be a mistake to read into the move to acquire Socialcam as a sign of weakness. However, if this is a push into consumer markets, didn't Autodesk watch how badly that move panned out for networking gear behemoth Cisco (CSCO)?

Autodesk may be the best at helping architects and engineers make their plans, but something about this deal's blueprint doesn't seem right.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Google, Facebook, and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Google.