In six months, the world has endured multiple challenges, including a pandemic that has spurred a global economic crisis. Microsoft CEO Satya Nadella noted that the combined company's addressable market will climb 58% following the acquisition.Around the world, 2020 has emerged as one of the most challenging years in many of our lifetimes. LinkedIn's international monetization has just begun, too. LinkedIn's core clients and its website users can benefit from Microsoft's impressive computational/programing strengths while Microsoft will enjoy LinkedIn's strong relationships with growing companies and professionals across the globe. By comparison, in Fiscal 2015, Microsoft earned 55% of its revenue from business customers. In 2015, LinkedIn earned almost 80% of its revenue from business clients, with around 60% of the company's sales coming from the rapidly growing Talent Solutions segment. LinkedIn is very similar to Microsoft in that consumers are very familiar with the flagship LinkedIn app and the company's main website, but LinkedIn's growth is based on B2B services. The company's cloud offerings, Office 365 subscriptions and big data technologies are pulling in corporate dollars, and the profit margins remain high. Microsoft, meanwhile, is developing new products/services for businesses and organizations. In addition, most of the new Alphabet ventures, such as self-driving cars, are aimed at B2C markets. While Alphabet sells billions of dollars of ads every year to businesses, the company's technology is focused on the consumer experience. #Linkedin stock price before microsoft offer windowsWhy is Microsoft a better fit for LinkedIn than Alphabet? The answer is very simple: Microsoft, despite its popular consumer products like the Xbox and Windows operating system, is now primarily a B2B company. (IBM (NYSE: IBM) would be another more suitable home for LinkedIn due to its intensive business focus.) In reality, though, Microsoft is a better parent for LinkedIn than Alphabet. Honestly, we doubted that any technology company except for Alphabet (NASDAQ: GOOG) would have the capacity and creativity to complete a deal for LinkedIn. We think those numbers speak for themselves.įorward View is not trying to brag because we admittedly didn't forecast that Microsoft would make such a bold move. Had you bought the stock when we became especially bullish following LinkedIn's 1Q16 earnings, your return would be 58%. If you had purchased LinkedIn stock on February 9 th following our 4Q15 earnings analysis, you would have earned an almost 91% return. A couple of people even suggested we were secretly buying the stock ourselves, an especially ludicrous idea because Forward View invests none of the firm's capital nor do our analysts trade in the shares of companies we cover. The stock rose, yet we were again accused of being a shill for the company. But, we digress.) Our entire research department was questioned by several other people, but our patience was rewarded by LinkedIn's flawless 1Q16 earnings. (Since we're not based on the Street and have a nontraditional business model, we found the anger rather misguided. One investor even wrote to us just to claim that Forward View represented everything wrong with Wall Street. (LinkedIn's share price remains slightly below the anticipated closing price.) Our LinkedIn earnings estimates remain unchanged, and we'll continue to cover the company until the transaction is finalized.īack in February, we received tremendous criticism for having a positive view of LinkedIn's stock before, and after, a disappointing 4Q15 earnings report. We'll keep our Buy rating on LinkedIn because Microsoft has no significant obstacles to completing the proposed acquisition of LinkedIn. The deal won't be accretive to Microsoft's earnings until Fiscal 2019 and will be mildly dilutive until then.įorward View is raising our target price on LinkedIn to $196, Microsoft's offer per share of LinkedIn stock. LinkedIn will be an independent business managed by the company's current CEO Jeff Weiner, and its financials will be reported in Microsoft's Productivity and Business Processes segment. When the suspension in trading was lifted, Microsoft's shares fell 2.6%. While LinkedIn shares rose 47% following the news, trading of Microsoft's stock was halted. The transaction should be completed by the end of the year. On June 13 th, Microsoft ( NASDAQ: MSFT) announced that it would be buying LinkedIn ( LNKD) for $26.2B in an all-cash acquisition to be funded by new debt issuance.
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