It’s Too Soon to Judge the Microsoft-LinkedIn deal

 

It is too early to tell if Microsoft’s purchase of LinkedIn for more than $26 billion will go the way of its purchase of Nokia, the Finnish mobile telephone company, a deal that tanked and had to be undone, sadly for all parties involved. Or if it will be like Skype, a stationary asset that has certainly a large user base but the market value of which has not grown significantly. Neither can we tell if it will, indeed, become a game changer. At this point, we don’t know. If there is one thing we can say, from our humble experience, there is this: when someone pays that amount of money, will want, and will feel entitled too, to see results soon. When those results are not forthcoming, there will be unbearable pressure on the acquired company (i.e., its employees) to “show the money,” and a lot of office disgruntlement will ensue. One reason why mergers and acquisitions end up making everyone miserable is not too different from what makes empires unhappy and causes them to collapse: the conquerors assure they will bring happiness and wellbeing for everyone, but they impose an alien culture and take away the freedom. After struggles that see the demise of a lot of jobs—not as bad as lives, but still—the parties decide to split. It happens all the time. Perhaps the boss of Microsoft, Satya Nadella, has his sight set on the very long term. Is this part of the struggle for supremacy against the other titans in the field: Google, Apple, and Facebook? Is Nadella the chess player that envisions the checkmate after the first couple of moves? To his credit, he was opposed to the Nokia acquisition. But he has now made an even bolder and more expensive move. In the meantime, we quote an analyst from Forbes: “For $26 billion, the acquirer should be getting something that either produces prodigious and rapidly expanding profits or has immeasurable strategic value. It’s not possible to argue LinkedIn offers either.” We will just wrap up by saying that it’s too soon to tell.

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