Microsoft’s purchase of LinkedIn – an inspired play or big gamble?
By Will Goodbody, Science & Technology Correspondent
As takeovers go, Microsoft’s purchase of LinkedIn is pretty massive.
In fact, it is Microsoft’s largest ever acquisition – and over the years it has bought quite a few other companies.
The deal will see the software firm pay $196 per share for the professional social network.
That’s a tasty 49.5 per cent premium on LinkedIn’s closing share price last Friday.
Its shareholders must be rubbing their hands in glee.
Last year LinkedIn’s shares had risen to $269, but have since fallen back considerably on doubts around its model and the wider economy.
For many this will make for a respectable exit.
But the big question on everyone’s lips is why?
What would Microsoft want with a professional social network with 433 million users worldwide, many of whom are lurkers more than active users?
After all, following years of drifting, its main focus now is cloud-based software solutions that help people to work together more easily.
Email, word processing, spreadsheets, document sharing, presentation software, business messaging, note management, CRM and more.
But what’s missing? Yes, you guessed it – a social network.
A mechanism to help users to find and connect with the right people when they are working on projects.
“This deal brings together the world’s leading professional cloud with the world’s leading professional network,” he said.
And although for now the two companies will continue as separate units, Nadella goes on to talk about how Office and LinkedIn could be combined in the future.
Microsoft products like Office, for example, could offer up ideas for people or articles which could be useful on a particular project, by using the power of LinkedIn’s web.
If you buy it, it is a genius strategy.
Complementary products which work in tandem to help improve the power of a service, and in the process lead to new opportunities for monetisation.
But if you don’t buy it, then this could turn out to be another catastrophic and very costly mistake for Microsoft.
It hasn’t always had the best results on acquisitions.
Its takeover of Nokia is the most recent example of one that went wrong, and one which cost it a write-down of $7.6bn, $400 million more than it paid for the firm in the first place.
aQuantive, Tellme Networks, and Navision are other names which Microsoft would perhaps prefer to forget.
These were, however, much less expensive purchases than the pending takeover of LinkedIn.
As a result, success or otherwise will be a huge deal, not just for CEO Satya Nadella, but for the company as a whole.
That, of course, includes the around 2,000 staff at Microsoft in Ireland and the 1,000 employees of LinkedIn here.
I’m told the initial reaction from those inside Microsoft locally has been positive.
Only time will tell though whether for them, Microsoft’s shareholders and both companies, this is a brilliant link up, or the start of a monumental break-up.
Comments welcome via Twitter to @willgoodbody