Good For LinkedIn, 'Terrible' For Microsoft

Microsoft Corporation MSFT has acquired LinkedIn Corp LNKD for $26.2 billion, representing a $62 premium over Friday's close of $131. Global Equities Research’s Trip Chowdhry commented that while this was good for LinkedIn’s shareholders, it was “terrible” for Microsoft’s shareholders. He added that Microsoft had “just burnt $26 billion of shareholders money.”

Track Record Of Failure

Chowdhry commented that Microsoft had a bad track record of managing large acquisitions, with a “history of failed acquisitions and strategic partnerships.” He noted the company was late to enter mobile, had acquired Nokia Corp (ADR) NOK which “failed miserably.”

Related Link: Microsoft To Acquire LinkedIn For $26 Billion, Its Largest-Ever Acquisition

Microsoft was late to search and was interested in acquiring Yahoo! Inc. YHOO, but instead had built a strategic partnership with the latter company, “which has ended up in a total disaster.”

Microsoft was late to ad-supported business, had acquired AQuantive, and again had failed miserably on it, Chowdhry pointed out. He added Microsoft had also been late to enterprise applications market with the acquisition of Great Plains Software and that business had failed to grow. Microsoft acquired Skype and the usage has been declining since then.

“It is extremely difficult for a Company to acquire insights ...and somehow MSFT has not learned its past mistakes,” the analyst commented.

What's Positive?

Chowdhry believes the deal is extremely positive for LinkedIn’s shareholders, as this represents the “best exit that could have happened,” since LinkedIn is a declining asset business.

“LNKD has a very weak messaging platform...probably MSFT Skype could fill the gap. MSFT Dynamics CRM business has plateaued ... may be MSFT thinks that by linking LNKD to Dynamic CRM could boost Dynamic CRM,” Chowdhry wrote, while adding that maybe LinkedIn could be moved to Azure Cloud.