MSFT to buy LNKD ... thoughts?

[Dividend Watcher]

Microsoft announced the purchase of LinkedIn today for $26 billion. They intend to finance it with debt although some sources say in the end it may not be all debt. Assuming it is, MSFT has $105b in cash and debt around $47b. Assuming all debt is used, Debt to Equity will end up at 69% (0.69). MSFT said they expect the acquisition will be accretive around 2018-19 which, to me, makes sense since it will take some time to integrate with other products as I'm guessing is their intention.

I'm not much of a social media maniac even though my kids keep pulling this old Luddite deeper and deeper into the morass, but I could see the potential of integrating Azure, Skype, Office 365 and LinkedIn into an integrated business environment as we progress (regress?) into the cloud.

If Ballmer were still in charge, I'd be very scared of him pissing away more shareholder resources. However, we now have Nadella who came from the coding branch of the company and seems to have more vision than Ballmer with his finance background.

I'm willing to sit back and watch how this works out.

Thoughts?

[EricL]

I'm on the fence about the deal. I can see why they did it as they try to expand reach in the business sector, but also have a hard time seeing how this will ever provide enough revenues/profits for the $26B transaction to make any financial sense. I have a feeling this will end up much like the Nokia deal did, and there will be a big write-down coming in a few years.

[Rasec]

Sounds like an utter waste of money from a company that has no idea of what they need. I might be proven wrong but I was right with the Nokia deal prediction.

[Bogart]

I was kind of wanting to buy some MSFT if it fell below $48 but I'm not so sure now.

[navyasw02]

I'm tempted to sell my shares.

I understand what he's trying to do, but I think his vision with it is pretty gimmicky and not particularly useful (just like Linkedin itself).

[crimsonghost747]

I don't like it at all. 26 billion is a massive amount of money and LinkedIn, to me, has never really seemed like one of those services that people use a lot. Ok sure you have an account, sure you might log in and send a message or two per week... if that. I still use email more than linkedin messaging.

[rayray]

I've always thought of LNKD as being kind of useless, every time I go on and have used it my thought has always been the same, "Okay, so what and this is useful how? And why am I here again?"

When I heard about MSFT and the $26 BILLION all I could think of was $26 Billion for a useless connection site. It's one of those sites that a lot of people I know create a profile, add contacts then never go on again. It's the professional version of, whatever FB killed.....MYSPACE!


EDIT: I signed on and it's changed a lot, like a cross between FB and Twitter for professionals. Couldn't do much without being a paid member, something I would never do because I hate paying for anything on a monthly/yearly subscription, especially if it feels like it's work related. I get enough work at work, I don't need and will not pay for a professional work related social site. My own time is my own time.


Now we all know Twitter will be bought for big bucks.

[Roadmap2Retire]

rayray, it depends on your line of business. I use LinkedIn and like the service. Its a great social networking platform for professionals. Ive made a lot of connections and gotten plenty of job opportunities through LinkedIn. I suppose it depends on how you use it. If there ever was a social media for which i would pay to use the service, LinkedIn would be it. Overall, I really like the business model...you have paid services and also advertisements bringing in the revenue. Ive looked at their earnings release statements in the past and a big chunk of their revenue comes from US -- and the international space is starting to grow now.

Having said that, is Microsoft making a good move by buying it? Absolutely not. They claim that this gives them a direct relationship with the enterprise world customers and leverage the CRM aspect. Reading the statements, it seemed like a lot of buzzwords thrown in to sound like they know what they are doing. Like Rasec indicated above -- this can be chalked up as another Nokia.

Cherry on the cake --> they looked at buying LinkedIn for $1.5B back in 2008 and decided that it was not a good fit. 8 years later, they are now paying 17 times that amount. Because, who cares when you can borrow money for almost free.
http://mashable.com/2016/06/13/microsoft....iQHqRnmqb

[Kerim]

Tim's take on this one seems pretty sound.

Quote:From what I can tell, LinkedIn shareholders just got away with one. The Microsoft acquisition was a huge blessing as a $26 billion valuation is very kind to a business that is losing over a hundred million dollars per year currently and has never even hit $30 million in profits in its history.

[DividendGarden]

(06-16-2016, 03:47 PM)Kerim Wrote: Tim's take on this one seems pretty sound.

Quote:From what I can tell, LinkedIn shareholders just got away with one. The Microsoft acquisition was a huge blessing as a $26 billion valuation is very kind to a business that is losing over a hundred million dollars per year currently and has never even hit $30 million in profits in its history.

I completely agree with Tim (I read his blog every day) on this.  I don't see how MSFT can wring out enough revenue from LinkedIn to make this a good deal.

[Rasec]

I'm starting to believe this deal was never about a future revenue stream but more a strategic positioning in the AI space without having to go fund a project from scratch (time to market) plus ability to hire the talent that Linkedin already has in house.

[EricL]

(06-17-2016, 02:31 PM)Rasec Wrote: I'm starting to believe this deal was never about a future revenue stream but more a strategic positioning in the AI space without having to go fund a project from scratch (time to market) plus ability to hire the talent that Linkedin already has in house.

I agree. I don't think it was so much about the current revenues or earnings, it was about partnerships and exposure to the business contacts it provides. It sounds like Salesforce was also in the bidding, and as a competitor, I don't imagine that MSFT wanted that merger to happen.

LinkedIn has around 400M members, much less than Facebook, but the demographic of people that use it is much more attractive for a company like MSFT who is trying to grow users of its software and cloud services.