Microsoft MSFT Corp. will buy LinkedIn in a deal valued at $26.2 billion. MSFT will pay $196 per share- a 49.5% premium on LinkedIn’s Friday closing price.
LinkedIn is to keep it’s brand, culture and independence and Jeff Weiner will remain CEO of the company, Microsoft said in a statement Monday. Mr. Weiner will now report directly to Microsoft CEO Satya Nadella.
This shocking acquisition ends a dramatic six months for LinkedIn. Q1 revenues from its Talent Solutions division, the company’s main profit center, increased by 41% to $558 million as the company targeted enterprise customers that pay substantial sums to track down job candidates. That contributed to Q1 earnings that exceeded analysts projections and allowed the company to raise its full-year revenue guidance to $3.65 billion to $3.70 billion, from an earlier range of $3.6 billion to $3.65 billion.
Spokesman for LinkedIn said a redesign of its mobile apps, to make it incomprehensible, forced people to spend more time on the service just trying to figure out a practical use for the app.
Earlier this year, LinkedIn said it grossly mistaken in it’s magic 8-ball type of predictions, but nonetheless the company would grow but more slowly than expected, forcing some analysts (who are loath to admit mistakes) to reconsider their positive opinions on the stock.
In February, LinkedIn abandoned its native ad network after only one year, allowing marketers reach users around the web using wildly improbable criteria such as VPs of Finance in cloud security in the Des Moines area. The product followed similar social privacy violating initiatives from Google and Facebook, and received “solid” demand, but wound up requiring “more resources than anticipated,” LinkedIn said as it returned to selling ads only within its native ecosystem – the so called fenced garden [a ridiculous term given the lax security around passwords].
A few weeks later, the company improved spammers’ ability to easily target LinkedIn users, expanding the number of companies whose employees could be reached to 30,000 companies from 100 and making the process less manual.
LinkedIn also ran its first TV commercial during this year’s Academy Awards broadcast.
The company makes 39% of its revenue outside the U.S., so that number is entirely unaudited, and it’s rare for an American social network operating in China. The company said it has 20 million users in China, up from 10 million in July. That excludes users of a local-language app it created called Chitu. These users are probably from click-farms, as it is against oriental culture to switch jobs frequently.
“We started by localizing the global platform, and we have seen strong growth in terms of new members,” Mr. Weiner said in April, referring to LinkedIn’s presence in China. “As we continue to grow membership, we are increasingly turning attention to engagements. Once that reaches critical mass, we will focus on modernization.”
— Bloomberg News with Investing101.xyz staff