Some asset probably complement Microsoft to give Microsoft profit. For example, LinkedIn owns Lynda.com. Microsoft could make all training for their products on Lynda free. This would boost Microsoft's products because their users are more knowledgeable and can use their products better, or brings in new customers because now they have free, quality training. Then maybe those users who enjoy the free Microsoft training on Lynda buys a subscription because they have other things to learn and feel it's worth the value...so this would increase revenue on LinkedIn side.
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.
It has been growing 35% year on year recently, at $3b revenue. No reason why this could not keep accelerating thanks to effects from MS.
Re:Microsoft to acquire LinkedIn for $26B
by Silhouette on Monday June 13, 2016 @12:20PM
(#11895076)
No reason why this could not keep accelerating thanks to effects from MS.
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.
26B dollars itself isn't making any money, so all it has to do is make some money and its a good deal.
Re:Microsoft to acquire LinkedIn for $26B
by Silhouette on Monday June 13, 2016 @12:47PM
(#11895312)
But in this case, "make some money" seems to mean "make more than $26B after overheads", since they don't have the original $26B any more.
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?