This is the thing I find hard to understand about these big corporate acquisitions. What multiple of "really close to profit" makes a bigger number than $26B?
If it's a start-up with obvious potential but relatively early in its life, or an established business that is currently reinvesting revenues on a large scale to drive growth, I can understand not being concerned about the profits.
But this is LinkedIn. It's not like it's a new company. It's already dominant in its market, and I don't see obvious potential for spectacular growth within the same area. If it's not already making big profits, what makes it worth $26B to Microsoft?
Yes, Microsoft could have achieved the same result by giving Lynda some $ per user that watches their Microsoft training...This is just one scenario...I hope they have more.
That seems a little optimistic to me. With LinkedIn in such a dominant position, there is only so far for them to grow in user numbers. That means they need to increase revenue-per-user as well to maintain anything like that kind of growth, but again there is only so far you can push with things like advertising rates before your customers can get better returns on their budget from other channels.
Big companies hate to be caught in the middle of controversies. LinkedIn's content is safe to a fault. Buying Twitter and making it uncontroversial would drain two-thirds of the value right away. Maybe more.
LinkedIn on the other hand is, depending on your point of view, either a database of incomplete, mostly outdated and uninteresting resumes, or a circle jerk of HR folks and dubious "coaches".
People stay on LinkedIn because they are afraid of missing out. But really, it's a genuine ghost town, a once promising service that was completely destroyed by their monetization needs and most of us have classified LinkedIn emails as spam long ago, after realizing you can't unsubscribe from it. And the only reason I haven't deleted my account yet is because once in a blue moon I get to take a look at forwarded profiles. You don't get anything interesting really, LinkedIn profiles are boring, superficial and generic, but hope never dies.
You can unsubscribe from all it.
This means that they can keep adding categories. For example I don't remember an option for receiving invitations for joining groups. If this option was available I would have disabled it and guess what, it's now enabled on my account.
But far more aggravating is that I'm receiving emails straight to my Inbox from HR people even though I unsubscribed from such email. Do you know how I know that LinkedIn has sold my email address against my preferences? It's because I'm using an unique email address just for LinkedIn.
You know, I can use a menu, I can find a link, have been doing it for quite some time ;-)
When I first heard the news it made no sense; but after pondering, I think I know what they are trying to do, and it does makes sense. Also, LinkedIn was relatively cheap compared to its counterparts, I've already seen some shareholders raising some ire because they were trading a LOT higher not long ago.
Microsoft doesn't have a good track record with big acquisitions, but this is Satya's first and we have seen other deals turned down by him for being too rich. Salesforce being the prime example.
They paid with all cash (which was yielding nothing,) so now they get the benefit of a company that has pretty good revenues, is really close to profit, and they get a massive tax write off. It also integrates well with their core businesses and like I said, it's fairly cheap.
Let's not forget Satya has had some smart aquisitions lately. Minecraft & Xamarin. So, maybe it's worth having confidence in this one.