LinkedIn is not worth 26 Billion. And this deal is a failure of Microsoft’s ability to make deals and manage acquisitions and mergers. This deal makes no financial, operational, and behavioral sense.
Microsoft paid $260 for each monthly active user of LinkedIn. Why pay this much? LinkedIn has some serious issues. One serious doubt on how they will get more users users and how to generate revenue from data and users.
Microsoft has an ambitious attempt to try to get the LinkedIn’s newsfeed to be a focal point for conversation in the office. It will surely fail because, like many Microsoft deals, it makes no financial, operational, or behavioral sense.
Recent Mergers and Acquisitions:
Microsoft’s record with big deals is poor. Here’s a list of some recent purchases:
5 Billion: Skype – 2011 – this has been their lone runaway success
3 Billion: aQuantive – 2007- Online advertising firm. Total bust!
6 Billion: Nokia – 2014 – handset business. Another flop.
Firms Dislike LinkedIn:
Microsoft wants LinkedIn to be the place to go for work news, and conversation topics. But firms are not likely to give employees more of an excuse to spend more time on social media. Firms also don’t want recruiters actively pursuing their staff. The site makes its money from paying recruiters wanting to pluck their staff, something businesses do not enjoy.