Microsoft Chief Executive Satya Nadella (bald dude) together with CEO Jeff Weiner (bearded dude) and Chairman Reid Hoffman (the fat dude) has said LinkedIn will be allowed significant autonomy after the acquisition. (Click Image To Enlarge)
Microsoft and LinkedIn are a natural fit, and the deal may fare better than Microsoft’s past acquisitions
The companies jointly announced the deal: Microsoft will pay $196 a share in cash for LinkedIn, which will retain its brand, culture and independence under the new structure. CEO Jeff Weiner will remain at the helm, reporting to Microsoft CEO Satya Nadella.
Both Weiner and Reid Hoffman -- LinkedIn chairman and controlling shareholder -- fully support the deal, and the both companies' boards have agreed to the acquisition. Microsoft will report LinkedIn as part of its Productivity and Business Process segment.
The companies share a mission to empower the global workforce, Nadella said in a Monday morning conference call.
"When we talk about Microsoft's mission, we talk about empowering every person and every organization on the planet to achieve more. There is no better way to really realize that mission than to connect the world's professionals to make them more productive and successful."
LinkedIn has grown its membership about 19 percent year-over-year to 433 million members worldwide. The network has 105 million unique members on the site per month, and 45 billion quarterly page views.
However, the company has seen its stock price falter in recent months in response to its warnings of shortfalls in projected revenue.
Mike Jude, a program manager at Stratecast/Frost & Sullivan, said.
"By combining professional social media with their Web-based business offerings, they have the potential to develop an extremely powerful collaborative environment that crosses business lines."
Microsoft can benefit by adding new business features to LinkedIn, but it could alienate LinkedIn members if it should push too hard to leverage their data for marketing and sales opportunities, he told the E-Commerce Times.
Many professionals use LinkedIn as their homepage -- similar to the way hardcore Facebook users begin and end their days, noted Jeff Kaplan, managing director of ThinkStrategies.
Salespeople often use LinkedIn as the default application for pursuing new business -- even more than they use CRM or other sales or marketing automation tools, he told the E-Commerce Times.
"Creating tighter linkages between LinkedIn's capabilities and Microsoft's Office 365 productivity/collaboration and its Dynamics CRM will [demonstrate] immediate benefits of the acquisition. In addition, it will encourage more developers to build applications on Azure PaaS that leverage the LinkedIn and Microsoft functionality, and store the data in the Azure IaaS."
Despite the potential benefits of combining LinkedIn's social network with Microsoft's cloud infrastructure, it's questionable whether Microsoft can pull off a successful integration. The company has fallen short with some recent acquisitions.
Poor Track Record
Kevin Krewell, principal analyst at Tirias Research, told the E-Commerce Times.
"I'm usually skeptical of big deals like this. The last huge acquisition by Microsoft was Nokia, and that didn't end well, with Microsoft eventually writing down most of the value of the deal."
However, Nadella may avoid some of the mistakes of previous executives, Krewell suggested, adding that there are synergies between the Office 365 cloud base and LinkedIn that can be exploited.
In addition, Linkedin has in-app messaging capabilities that could be integrated into Microsoft's Skype video, phone and messaging application, Tirias Principal Analyst Paul Teich told the E-Commerce Times. The deal also provides Microsoft with a network of business influencers to analyze with its deep learning tools.
There are lots of reasons for skepticism. The price tag, for one. At $26.2 billion, it is by far Microsoft’s largest acquisition ever. The size alone is a reason for caution, given the sorry history of such large deals.
Then, there is Microsoft’s own checkered history with acquisitions. It has recorded write-downs exceeding the $9.4 billion it paid for the handset unit of Nokia Corp. in 2014. Earlier deals for Skype Technologies and Yammer Inc., designed to bolster Microsoft’s digital and social credentials, did little of either.
But this deal can succeed where the others failed.
There is real synergy between the companies and their products, particularly Microsoft’s Office productivity suite—now delivered primarily online—and LinkedIn’s core database of more than 400 million mostly professional profiles.
“It’s really the coming together of the professional cloud and the professional network.”
In other words, we now work by toggling between our productivity software and our social networks. But why should the two be separate?
Microsoft CEO Satya Nadella and LinkedIn CEO Jeff Weiner discuss Microsoft's acquisition of LinkedIn. Learn more at: http://news.microsoft.com/?p=298414
Mr. Nadella is betting that were these two concepts reconceived today, they would be one.
LinkedIn Demographics Match Those of Microsoft
LinkedIn’s users are, arguably, Microsoft’s core demographic. They also offer Microsoft something it has long sought but never had—a network with which users identify. Microsoft needs to persuade LinkedIn users to adopt that identity, and use it across as many Microsoft products as possible.
Access to those users, as well as the enormous amounts of data they throw off, could yield insights and products within Microsoft that allow it to monetize its investment in LinkedIn in ways that the professional networking site might not be able to. Mr. Nadella already has mentioned a few of these, including going into a sales meeting armed with the bios of participants, and getting a feed of potential experts from LinkedIn whenever Office notices you’re working on a relevant task.
Microsoft's CRM Software Could Get Revenue Boost
LinkedIn also could supercharge Microsoft’s Customer Relationship Management (CRM) software, used to identify and track sales leads. Microsoft is in fourth place in market share among the large CRM players, including Salesforce.com Inc., SAP SE and Oracle Corp.
Enterprise Resource Planning (ERP) Software Market Shares Year 2015 (Click Image To Enlarge)
Top Six Enterprise Resource Planning (ERP) Software Vendors in Millinos Revenus For The Year Ending 2015 (Click Image To Enlarge)
Top 10 Enterprise Resource Planning Software Vendors by Revenues in Millions, Year 2015 vs 2014 (Click Image To Enlarge)
Salesforce is the market leader, but it holds a minority of the complex and sometimes ill-defined market.
LinkedIn already has its own CRM-type product, LinkedIn Sales Navigator, but more important, it has the data and reach that any CRM company would covet.
If CRM is ultimately about managing relationships, what better vehicle for that than an existing social network with its built-in insight about who is connected to whom?
LinkedIn shares fell by nearly half in a single day in February when the company issued a gloomy sales outlook. Michael Wade, professor of innovation and strategy at Switzerland-based business school IMD, says the company hasn’t lived up to its potential for a while.
Mr. Wade says LinkedIn hasn’t evolved quickly enough beyond its roots as a recruiting tool and job-search site. Most of its users aren’t looking for a job, and LinkedIn has so far done a poor job of getting them to come back to the site regularly to connect with and expand their professional networks. Only about one quarter of LinkedIn’s 400 million “cumulative” users return to the site every month.
That brings us to perhaps the biggest reason why the deal may succeed: Mr. Nadella. Put bluntly, Microsoft today is a very different company than the one that acquired Nokia, Skype or Yammer. Under Mr. Nadella’s predecessor, Steve Ballmer, Microsoft sought to drive users to its platforms, primarily Windows.
As a corollary, that meant that acquisitions were quickly integrated with other Microsoft products and development of new features slowed.
Mr. Nadella has shown a willingness to meet users where they are, even if that is devices running Apple Inc.’s iOS or Alphabet Inc.’s Android mobile operating systems. On Monday, Mr. Nadella said LinkedIn will be allowed significant autonomy, similar to Microsoft’s handling of Minecraft maker Mojang.
That would mean walking a fine line between autonomy and synergy. The longer the rope that Mr. Nadella gives LinkedIn CEO Jeff Weiner, the less benefit there may be to Microsoft’s products.
But don’t bet against him. If Mr. Nadella can re-energize an organization as big and legacy-bound as Microsoft, who is to say he can’t do the same for 13-year-old LinkedIn.
COMMENTARY: For Microsoft CEO Satya Nadella, the culture created inside the walls of any company isn't just important, "it's everything."
Nadella, who spoke with USA TODAY in anticipation of his keynote address Tuesday at Salesforce's annual Dreamforce customer event, says "ultimately what any company does when it is successful is merely a lagging indicator of its existing culture. He says.
"At Microsoft, we're aspiring to have a living, learning culture with a growth mindset that allows us to learn from ourselves and our customers. These are the key attributes of the new culture at Microsoft, and I feel great about how it seems to be resonating and how it's seen as empowering."
Microsoft has been in the throes of a small cultural revolution, one largely guided by longtime employee Nadella. Where Microsoft's ethos under predecessors such as Steve Ballmer and co-founder Bill Gates had autocratic and anti-Silicon Valley overtones, the company has made concerted efforts in the past few years to both promote internal dialog as well as forge external relationships.
Where Microsoft employees once received mandates from the C-suite, today they share ideas at company-wide hackathons. And where Microsoft once had combative relationships with rivals such as Apple, today the company has forged a variety of new partnerships with Salesforce, Box, as well as Apple. These moves are seen by many analysts as make-or-break plays to try and position Microsoft for growth in a competitive cloud- and mobile-first world.
Another big tech issue of the day is finding talent, due to a small pool of engineers being chased by a growing number of tech enterprises. In Silicon Valley, new hires are often wooed by six-figure salaries and promises of perks ranging from in-house chefs to flexible work schedules. Given such lavish overtures, a recent report in The New York Times that described a toxic work environment at Amazon caused a stir in social media circles.
Nadella doesn't hesitate when asked about the Amazon workplace debate, though he doesn't mention the cross-town company by name. Nadella says.
"The notion of having work-life harmony in a highly competitive economy is a first-class topic. I think the key is to make sure you're engaging in a dialog with your employees. There also needs to be flexibility in all the (workplace) policies that someone like me sets and propagates. You cannot have people burn out. It's bad for your company, and it's bad for society."
Whether LinkedIn's more casual, entrepreneurial, and innovative culture under CEO Jeff Weiner and Chairman Reid Hoffman will mesh with the corporate style of Microsoft under CEO Nadella will meh remains to be seen. Some hints may be found in what Jeff Weiner said as a reason why he sold LinkedIn to Microsoft.
“The Microsoft that has evolved under Satya’s leadership is a more agile, innovative, open and purpose-driven company,” Weiner wrote. “It was the latter point that first had me thinking we could make this work, but it was his thoughts on how we’d do it that got me truly excited about the prospect.”
Inside LinkedIn's Numbers
On April 28, 2016, LinkedIn reported their financial results for first quarter 2016.
Jeff Weiner said.
"We are off to a good start in 2016 with strength in our core and emerging businesses, and we continue to invest heavily in innovation and in our core products, while at the same time driving focus and scale to enable growth and leverage across the business.
Total revenue increased 35% year-over-year to $861 million.
Talent Solutions revenue increased 41% year-over-year to $558 million.
- Hiring revenue contributed $502 million in revenue, up 27% year-over-year.
- Learning & Development contributed $55 million in revenue.
Marketing Solutions revenue increased 29% year-over-year to $154 million.
Premium Subscriptions revenue increased 22% year-over-year to $149 million.
Adjusted EBITDA was $222 million, or 26% of revenue.
GAAP net loss attributable to common stockholders was $46 million and non-GAAP net income was $99 million.
GAAP diluted EPS was $(0.35), compared to last year's performance of $(0.34). Non-GAAP diluted EPS was $0.74, compared to $0.57 last year.
I highly encourage you to review associated materials, including our GAAP and non-GAAP reconciliation. 
See slides below.
Courtesy of an article dated June 16, 2016 appearing in The Wall Street Journal and an article dated June 13, 2016 appearing in eCommerce Times and an article dated April 6, 2016 appearing in Apps Run The World and an article dated June 13, 2016 appearing in Time and an article dated September 15, 2015 appearing in USA Today