Kicking off the week, Microsoft (News - Alert) has agreed to buy business social media firm LinkedIn for an all-cash deal of $26.2 billion. Microsoft is paying LinkedIn $196 per share and plans to finance the deal with new debt. But is it a good deal or will it be a bust like the vaunted Nokia purchase? I'm thinking there's more good than bad, but I think Microsoft is paying a tad too much.
LinkedIn (News - Alert) will continue to operate as an independent division after the deal closes "retaining its distinct brand, culture and independence" and keeping CEO Jeff Weiner, who will report to Microsoft CEO Satya Nadella (News - Alert). The company currently boasts more than 433 million members worldwide, with 105 million unique visiting members per month and more than 7 million active job listings.
Clearly, LinkedIn has become the business professional's way to network. Since it operates in a cloud environment, we can expect to see some of those "business synergies" (cost savings) in the service moving to Microsoft's Azure cloud. And it gives Microsoft a whopping big social media footprint overnight.
The fun really begins when LinkedIn is "native" on Azure and Microsoft starts interweaving LinkedIn with all of its other cloud-based business productivity tools. LinkedIn essentially represents the world's largest business-to-business directory of individuals in the world, providing contact information along with classification and some bare-bones ratings of an individual's skills. It's a business directory that crosses boundaries and is not wired into any specific operating system or company making it uniquely valuable to the right company .
Leveraging its investments in the cloud, Skype (News - Alert), and WebRTC, Microsoft will be able to facilitate communications between companies and businesses using LinkedIn on a scale that we can only start to imagine. If you need to contact someone at another company, LinkedIn will be able to offer one-click networking in an omnichannel fashion, with your choice of everything from email (the new Snailmail) to real time direct video conferencing using Skype's new WebRTC tricks.
Need to build a project team across the company or between companies? Start by using LinkedIn to create a virtual team list, then use Microsoft cloud services for collaboration with everything shared in Azure and everything stored in the cloud. Add Microsoft's burgeoning AI smart machine services to add security authentication for real time communications, recommendations to add new skills and team members when tasks grow, and analytics to provide project managers with metrics on progress. Other Microsoft smart machine tools will be able to enhance LinkedIn services to aid human resources in recruiting the best employees.
Bottom line: You'll see LinkedIn interwoven into everything Microsoft, including Outlook, Calendar, Active Directory, Office, Windows, Skype, and even services like Cortana and Bing.
I'd expect LinkedIn to continue to operate in its freemium model, but maybe getting certain paid subscription services bundled in with other Microsoft offers. Adding a dollar or two per month to Office 365 in exchange for deep access to the world's largest business directory sounds like a bargain to me rather than paying anywhere from $30 to $120 per month. Then again, LinkedIn is bringing in over $3 billion per year, so messing with the existing subscription structure may not be in the cards.
There's hot speculation that Microsoft may combine LinkedIn with customer relationship management (CRM) software, which would make it a "Killer" app, as in something that would kill SalesForce and many other CRM service offerings. I think a move like that is further down the road, because at some point that edges to potential anti-trust territory and lawsuits.
With all the value in LinkedIn and the various synergies you get by blending LinkedIn with Microsoft cloud services and software, it's clear that LinkedIn is worth a pretty penny, especially given its unique role in the social media space as a business networking tool. My only ding here is LinkedIn's past issues with security, something that I expect Microsoft to fix/upgrade as the service is moved onto Azure and integrated in with the Microsoft family of products and services.