Market Overview

Chowdhry: Microsoft Is A 'Dead Stock' With No Revenue Catalyst

Chowdhry: Microsoft Is A 'Dead Stock' With No Revenue Catalyst

Trip Chowdhry of Global Equities Research is not a fan of Microsoft Corporation (NASDAQ: MSFT)'s $26.2 billion acquisition of LinkedIn Corp (NYSE: LNKD).

In an email to clients, Chowdhry suggested Microsoft's acquisition will "likely fail" as part of its ecosystem. Specifically, the analyst noted that he has been tracking social media companies for seven years and in the second quarter of this year the sector experienced a "significant" shift.

Specifically, Chowdhry noted the second quarter of 2016 saw 1) a significant uptick in M&A activity, 2) an uptick in layoffs in the industry, and 3) significant management reshuffling.

"Taking all the above together: Industry Structure is fast changing, and investment thesis in Social Media Sector many need a refresh," the analyst wrote.

Related Link: Good For LinkedIn, 'Terrible' For Microsoft

Chowdhry continued that Microsoft has developed a track record of having "zero insights" in its acquisitions. As an example, Microsoft was an early investor in Facebook Inc (NASDAQ: FB) when it was still a private company and justified its investment by suggested that Facebook users could use Microsoft Office to communicate with each other.

"This reasoning was a total BS," the analyst said.

As another example, Microsoft entered into a partnership with an India-based internet cafe chain called Satyam Infoline. The company's justification for the partnership was based on the theory that India's massive 1.2 billion population will have greater access to Microsoft.

"People do not go to Internet cafes to use MSFT Office," Nadella also argued. ... Fast Forward today ...this reasoning was also a total BS..."

Bottom line, Microsoft's justification to acquire LinkedIn is also "full of BS" and "all smoke and mirrors." Just like in the prior examples, Microsoft's "fixation" on combining its Office product with LinkedIn's platform "is the reason they continue to fail."

Latest Ratings for LNKD

Jul 2016MaintainsNeutral
Jun 2016DowngradesOutperformSector Perform
Jun 2016DowngradesBuyNeutral

View More Analyst Ratings for LNKD
View the Latest Analyst Ratings

Posted-In: Global Equities Research Microsoft Acquisitions Microsoft M&AAnalyst Color M&A News Analyst Ratings Tech Best of Benzinga


Related Articles (LNKD + FB)

View Comments and Join the Discussion!

Latest Ratings

AVAWilliams CapitalDowngrades42.0
CDEVSunTrust Robinson HumphreyUpgrades8.0
AGCOBMO CapitalMaintains80.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Are Engineers Increasingly Picking Detroit As A Workplace Over Silicon Valley?

Mid-Afternoon Market Update: Dow Falls 75 Points; Eleven Biotherapeutics Shares Spike Higher