Did Microsoft fail with LinkedIn

Microsoft buys LinkedIn for $ 26.2 billion

It is the largest takeover Microsoft has ever made: The company will buy the LinkedIn career network for $ 26.2 billion, Microsoft announced on Monday. The IT group is offering $ 196 per share. That's a hefty surcharge on Friday's $ 131.08 closing price. Compared to prices last year, however, it is still a kind of bargain: The share was at times already quoted over $ 260.

Microsoft gets an enormous amount of data

Linkedin is to remain its own, independent brand even after the takeover. Company boss Jeff Weiner remains on board and will continue to lead the business as CEO. At LinkedIn, users can introduce themselves in professional profiles, look out for new jobs and communicate with other members in a network. Companies also use the portal to search for employees. In the first quarter of 2016, the number of users worldwide rose from 414 to 433 million. In German-speaking countries, Linkedin exceeded the mark of eight million members. Microsoft pays around $ 65 per user - and receives an enormous amount of data in return.

"Together we can accelerate the growth of Linkedin"

Both companies have summarized information about the deal in a video. "Together we can accelerate the growth of Linkedin," said Microsoft CEO Satya Nadella. The chairman of the career network, Reid Hoffman, emphasized: "Linkedin is being founded again today." However, the Microsoft boss does not give any really specific information about the reasons for the purchase here either. However, Microsoft is urgently looking for new business areas because the group has gone for a swim with its mobile strategy and Windows is no longer selling so well.

There are a few more details in a memo to Microsoft employees. Nadella suggests here that the main focus is on interlinking with Office 365. It would be conceivable, for example, that Office users could search directly for suitable people for upcoming tasks in the future. There is also talk of new possibilities for targeted advertising. In this way, Linkedin could be converted into a Facebook for business customers in which Microsoft is omnipresent.

Third largest deal in IT history

The LinkedIn takeover is the third largest deal in IT history. At the top of this ranking is the acquisition of EMC by Dell announced last year, which is worth 67 billion dollars. This is followed by Avago's purchase of Broadcom, announced in May 2015, for 37 billion. With the current announcement, the WhatsApp takeover by Facebook, which caused a big stir in 2014 due to its volume of 19 billion dollars, is slipping out of the top 3.

According to information from Recode, Microsoft had been looking for a larger takeover in the enterprise space for some time. Negotiations with Salesforce are said to have been held, but the deal ultimately failed due to different price expectations. Microsoft was ready to pay 55 billion while Salesforce had more of 70 billion dollars in mind.

New course from Microsoft

Nadella has been leading Microsoft since February 2014 and gave the company a new course. Microsoft traditionally lived mainly from selling its Windows operating system and its office programs. But with the shrinking PC market, the Windows money machine has become less reliable. And for Office there is cheap competition from, among others, Google and other providers who have mobile devices in their sights. Nadella relies on subscriptions instead of purchasing software and stated the goal of making online services from Microsoft available on all platforms - for example on Apple's iPhones and iPads and devices with the Google Android system.

It is not the first attempt for Microsoft to expand its market presence with a network. In 2012, the company acquired the enterprise communication-oriented messenger platform Yammer for $ 1.2 billion. Yammer is designed to improve collaboration and confidential communication. Only members from the same email domain can network with each other.

Slack

According to Microsoft, Yammer is currently used by 85 percent of the "Fortune 500" companies. In Germany, however, the service could not really gain a foothold. And young rival Slack is rapidly gaining popularity.

LinkedIn, launched in 2003, is one of the veterans of online services. The company has been listed on the stock exchange since spring 2011. For years, the company has been using data analysis to help them find personnel.

Stock market reacts

The stock exchange received the announcement of the deal with great interest. LinkedIn shares rose 48 percent in just a few minutes. Microsoft investors show themselves less pleased, the shares of the Windows manufacturer temporarily fell by up to five percent. (sum, apo, APA June 13, 2016)