Microsoft acquires LinkedIn (and it is huge)
Creating a stir in the technology world earlier this month was the news Microsoft Corporation (NASDAQ:MSFT) was investing a whopping US$26.2 billion in cash to acquire the professional networking site LinkedIn Corp. (NYSE:LNKD). This is the largest ever acquisition by Microsoft and the purchase price corresponds to a nearly 50% premium on LinkedIn’s share price at the time.
According to statements from both companies, the deal is expected to close before the end of 2016 – pending final approvals – and will see LinkedIn maintain its distinct brand, culture and independence with CEO Jeff Weiner retaining control of LinkedIn’s operations, and reporting directly to Microsoft CEO Satya Nadella. Predictably, both Nadella and Weiner have expressed their shared vision on how this deal will accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Microsoft Dynamics.
LinkedIn has 433 million registered users worldwide, out of which 105 million are active users visiting the site every month, and about 2 million are paid subscribers – all of whom are now potential customers for Microsoft’s products and services. Through this acquisition, Microsoft also gains access to LinkedIn products such as presentation sharing software SlideShare and professional training service Lynda.com.
While LinkedIn has been performing poorly on Wall Street since the start of this year, they will benefit from Microsoft’s software development prowess. LinkedIn can utilise Microsoft’s field and distribution channels to reach new audiences and more customers and will have access to Microsoft’s scaled cloud infrastructure and technology stack.
The acquisition opens a plethora of integration opportunities. PowerPoint users seeking help could see a list of subject matter experts from their network appear directly within the application. Microsoft and LinkedIn executives outlined a host of ideas for the future including – the creation of a single source of truth wherein an individual’s profile is automatically synced across apps like Outlook, Skype and Office keeping the data current, a unified news feed and a predictive digital assistant that will keep users constantly updated with information tailored to events like meetings and projects.
Industry opinion on whether this deal makes fiscal sense for Microsoft remains divided. When it comes to acquisitions, Microsoft has had a mixed track record. In 2014, the company bought the mobile phone assets of Finnish telecom company Nokia, which turned out to be a disaster with Microsoft writing off a loss of US$7.9 billion in July last year. Earlier deals for Skype Technologies and Yammer Inc. appear promising, the jury is still out on whether they have actually delivered hoped-for benefits to Microsoft.
While the success of this acquisition remains to be seen, a Microsoft-LinkedIn marriage could potentially reinvent productivity and business processes for Microsoft customers. As articulated by Nadella, “It’s really the coming together of the professional cloud and the professional network.”
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