Already software giant, Microsoft’s most recent purchase of LinkedIn is the biggest yet. And, for a whopping $26.2 billion, Microsoft has plans to make the recently declining LinkedIn platform even bigger than Salesforce. LinkedIn is known as one of the world’s best business-to-business sales tools. With the introduction of Microsoft’s cloud-based platforms, Dynamics CRM suite, and Office 365 email provider, LinkedIn may soon have the ability to one-up Salesforce’s market share. That is if Microsoft is able to successfully leverage LinkedIn’s customer data for more professional integrations with regard to content and functionality of its products.
Early February 2016, LinkedIn shares declined over 43%, leaving the business sales tool weary of their future as a standalone company. Microsoft’s recent acquisition, however, gave LinkedIn the better end of the stick for the short term as Microsoft paid a 50% premium on their company’s June 10th share price of $131. In other words, Microsoft valued LinkedIn at $196 per share when the purchase took place.
Even though LinkedIn’s shares declined in 2016, it also had a lot to show for in terms of revenue, sales, and user-base. It’s marketing solutions revenue bumped up by 29% within the last quarter to $154 million. This bump in revenue translated to a total increase in sales by 25%, or $881 million. Since 2014, LinkedIn has seen a 44% increase in users as well.
“As Microsoft transforms their brand—and I think [Microsoft CEO Satya Nadella] has done a pretty amazing job getting Microsoft into considerations it hadn’t been in a long time—as that brand gets more relevant, LinkedIn will become a key component in that sort of brand refresh, brand evolution,” said Seth Solomons, North America CEO of direct marketing agency Wunderman.
What makes this acquisition a little different than the rest is that LinkedIn’s value is not being realized by its social network capability and functionality. Instead, LinkedIn’s value is being realized by its platform data graph and model.
Microsoft CEO Satya Nadella says, “This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow,”Nadella wrote.