He also promises that Microsoft will become better at predicting what information users might find useful, suggesting news articles related to a project someone is working on or recommending a friend of a friend online who might be able to help an employee with a task at work. Mr Nadella has suggested that with LinkedIn, Microsoft will become the platform for managing workers’ personal details from around the web. Such extra features should, in theory, encourage companies to buy new cloud services from Microsoft.Įven so, the deal’s rationale looks questionable. The latter might gain in popularity if LinkedIn keeps users’ details up to date and offers alerts if a contact moves firms. It will also dovetail with Microsoft’s existing products in Office, its collection of business applications and services that includes Word, Excel and Outlook, an e-mail system. Salesforce’s current market value is around $55 billion. The two firms could not agree on a price at the time. These data could prove valuable to Microsoft as it attempts to build offerings for managing relationships with customers and to compete with Salesforce, a firm it reportedly tried to buy last year. The firm gathers detailed information about its users, including their employment history, education and whom they know. LinkedIn will be useful to Microsoft for other reasons, too. These boffins design algorithms to find patterns in big piles of digital information. The social-network firm has an enviable team of data scientists, a commodity coveted by tech firms. This involves putting less emphasis on Windows, the firm’s flagship operating system, as well as beefing up cloud computing and putting the firm at the forefront of advances in machine learning and artificial intelligence.Īcquiring LinkedIn is an element of this masterplan. Unlike his predecessor, Steve Ballmer, who was slow to invest in these areas, Mr Nadella has a grand scheme to reposition Microsoft. Unassailable during the desktop-computing era, Microsoft is still the world’s largest software-maker, but now has to compete with rivals such as Google and Amazon as computing shifts towards mobile devices and the cloud. ![]() Mr Nadella may have felt that he could not wait. Michael Cusumano at MIT’s Sloan School of Management reckons that the social network would have cost considerably less in a year’s time. Its share price has not fully recovered.ĭespite these worries, Microsoft paid a generous 50% premium over LinkedIn’s share price to acquire the firm. The decline was the biggest one-day fall since the company went public in 2011. LinkedIn had also revealed that it made a net loss of around $165m in 2015, despite revenues of $3 billion, in large part because of excessive stock-based compensation. Revenue growth has been slower than expected, and rolling out new businesses and improving existing ones has proved pricey.Ĭoncerns over the pace of progress came to the fore in February, when LinkedIn’s share price sank by more than 40% in a day, shedding $11 billion from its market value, after the firm reported that forecasts of revenues for 2016 were lower than expected. LinkedIn makes most of its money by selling subscriptions to corporate recruiters, who prowl through its database of executives looking for prospective employees. Although LinkedIn is the largest professional social network by far, with around 430m registered users and 100m visitors to its site each month, some analysts have questioned how much bigger it can become. Microsoft is paying a high price for a firm that has suffered its fair share of setbacks. The deal was accompanied by substantial promises from Mr Weiner and Microsoft’s boss, Satya Nadella, that the deal would transform businesses’ and workers’ productivity worldwide. Microsoft had just announced it would pay $26.2 billion to buy the professional social network, making it the third-largest acquisition in the history of the tech industry. ![]() “IMAGINE a world where we’re no longer looking up to tech titans such as Apple, Google, Microsoft, Amazon and Facebook.because we are one of them.” So wrote Jeff Weiner, boss of LinkedIn, in an open letter on June 13th.
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