Linkedin and Microsoft Deal Summary

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Linkedin is less and less profitable, its opera8ng margin is nega8ve and decreasing as well as the net income. Their costs are increasing with their growing sales team and interna8onal expansion but Linkedin is strugling to make its revenue grow as fast.

Key financials

$3B total revenue (+35% yoy)

Breakdown : 2/3 S Talent Solu8on : $2B Talent Solu8ons Revenue (+40% yoy) 1/3 S Marke8ng Solu8ons 1/3 S Premium Subscrip8ons : 2M+ paid subscribers

$0.3B Sponsored Updates revenue (+100% yoy)

Risks

Here are the major risks that Linkedin is facing and which could have a major nega8ve impact on the sustainability of the company :

Reten8on of their members Reten8on of their customers (Renewal of paid solu8ons)

Usage/Engagement : On average Linkedin is used once a week which is not a good metric for a social network.

OutSofSdate, inaccurate or lack the informa8on in members’ profiles : Mobile device

Scalability / management of growth Profitability (cost increase and declining growth rate) Technical risks (security, scalability...)

Privacy

The deal

Microson will acquire Linkedin for approximately $26.2 billion Linkedin will keep its dis8nct brand, culture and independence

Jeff Weiner will remain CEO, report to Satya Nadella and join the Microson Senior Leadership Team

Why ?

Microson and Linkedin share a common mission centered on empowering people and organiza8ons.

The acquisi8on’s goal is to realize this common mission by bringing together the world’s leading professional cloud and network

Drive increased engagement across Linkedin as well as Office 365 and Dynamics

Accelerate mone8za8on through individual organiza8on subscrip8ons and targeted adveri8zing

Linkedin and Microson both have a unique presence in the professional world

Possible synergies

There are real synergies between the two companies in the professional world (especially with Office 365), here are some examples :

A unique and enhanced professional newsfeed and profile (office 365 + Linkedin profiles)

Enhanced digital assistant (Cortana + Linkedin Connec8ons)

Predic8ve and Social Selling (Dynamics + Sales Navigator)

Social Learning (Office 365 + Lynda)

Other benefits

Make Bing berer for professional search

Access for Linkedin to Microson distribu8on channels and technologies

Microson will enhance its set of API (Linkedin Developer + Microson Developer)

Why this deal could be a failure

Price of the acquisi8on : Microson bought Linkedin at $196 per share, represen8ng a 49.5% premium over Friday’s closing price. Will Microson manage to get a good ROI ?

Linkedin’s Business Model : Linkedin has 400M members but hasn’t yet managed to get a profitable and sustainable business model, its profit margin is decreasing and there is uncertanty about the renewal of its paid subscrip8ons

Microson’s last big acquisi8on was a total failure (Nokia)

Compe88ton with other Microson products : Yammer, Skype

Thank you