A bargain? Was this drivel written by Microsoft?
The get to know my gender? Shock f***ing horror. I daresay they could have guessed that from my name. And I've not told Linkedin about either marital status or sexuality.
So they reckon each profile (!=active user) is worth sixty dollars. Where's the worth in me to MS? I don't like MS, and I won't alter that view either way for this. Whilst I'm in a reasonably senior role, I don't have IT or procurement decision making powers (and certainly wouldn't admit to any influence if I had any). So as advertising cannon fodder I'm worthless.
The reason Microsoft have just spent a staggering $26bn on a pile of incomplete and unformatted CVs is not some clever strategic rationale. It is because they simply don't know what else to do with the money. I haven't paid to use Linkedin until now, and I won't in future. If the cost of a few adverts gets me access then that's fine, if it goes down hill (as is likely) then I'll close my account. Problem for Microsoft is that their weighted average cost of capital is about 9%. Amortise the capital over fifteen years, cost the capital at 9%, and in the next could of years Microsoft have to get back $5.8bn each year in profit from Linkedin just to break even. But Linkedin made a net loss in each of the past four quarters. Microsoft need to make an operating profit significantly above the circa $3.2bn revenue that Linkedin reported over the past year.
Conclusion: Linkedin shareholders should cash in and laugh. Microsoft shareholders should gnash their teeth and weep as the company's M&A touch of death repeats itself. Interesting data experiment for anybody with time on their hands: Collectively, how much have US tech companies written off from failed acquisitions since (say) 1990?
Biting the hand that feeds IT
