This morning, Microsoft announced its acquisition of LinkedIn. Microsoft will buy the social networking company for $26.2 Billion, valuing the LNKD stock at $196 – almost 50% higher than its closing price on Friday.
Didn’t see the merger coming? You’re not alone. No one knew – even senior employees learned of it this morning and so the reaction among LinkedIn executives is still a bit muted, “people don’t know what to think yet”.
— Matt Rosoff (@MattRosoff) June 13, 2016
For the time being there will be little change in the leadership team at LinkedIn. Jeff Weiner will remain the CEO. However, the employees who focus on maintaining LinkedIn’s status as a publicly traded company may not be as lucky when it comes to job security.
When looking at the slide deck for LinkedIn and Microsoft’s investors conference call on June 13th at 11:45am EDT, it is clear that one reason Weiner and Satya Nadella think the merger will be smooth is that the two companies have a common mission: to empower people and organizations.
— Alan Lepofsky (@alanlepo) June 13, 2016
The acquisition of LinkedIn shows that Nadella is hoping to phase out Windows and focus more on cloud services. Furthermore, LinkedIn becoming part of Microsoft’s productivity and business process segment has led Weiner and Nadella to believe professionals will be more productive, and marketing, selling and talent managed business processes will be reinvented.
In the first quarter of 2016, LinkedIn announced their “total revenue increased 35% year-over-year to $861 million”. Currently, LinkedIn makes their money off of recruiting services, sales solutions and premium subscriptions. Even though LinkedIn is one of the better performing tech companies in the public market, until recently, LinkedIn’s stock was the lowest it had been since the beginning of 2013.
How does Microsoft hope to continue making money with the only business-focus social networking platform? Nadella has a vision to make LinkedIn Microsoft’s sales channel and expand their social platforms. To continue growth, Microsoft plans to grow both individual and organization subscriptions and targeted advertising.
— R Ray Wang (王瑞光) (@rwang0) June 13, 2016
With Microsoft’s strategy to monetize with integration into existing and future Microsoft products, it is difficult not to compare their plan with previously failed acquisitions made with the same intentions, such as Yahoo and Flickr or WhatsApp and Facebook.
The Microsoft and LinkedIn deal is not expected to close until the end of 2016.
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