LinkedIn, which calls itself “the world’s largest and most valuable professional network”, has been seeking to expand its offerings with more messaging, mobile applications and revamped its “newsfeed” to help boost engagement.
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In what may be one of the biggest acquisitions in recent years, Microsoft made a surprise announcement that it is acquiring business-oriented social networking site LinkedIn for $26.5 billion.
LinkedIn will remain an independent unit of Microsoft.
LinkedIn CEO Jeff Weiner stated that “It will retain its distinct brand, culture and independence. I see incredible opportunity for our members and customers”, said Reid Hoffman, co-founder and controlling shareholder of LinkedIn, which has seen its share price fall by 40% over the past year. The companies expect the deal to close this year.
For Microsoft, the value of LinkedIn isn’t in the cash the company is generating. He hoped to reinvent user process through the products, saying the software combined with LinkedIn’s network could reinvent selling, marketing and talent management business processes while making professionals more productive.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals”, said Nadella. “Together we can accelerate the growth of LinkedIn.as we seek to empower every person and organization on the planet”. He says Microsoft seems well-aligned with LinkedIn, but the execution may still be hard, and Microsoft will need to allow LinkedIn to remain innovative and flexible. Meanwhile, Microsoft lost around 3.3 percent. Think about it: “How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world”.
LinkedIn (LNKD) shares closed Monday at $192.
LinkedIn makes money through subscriptions and advertising revenue, although growth in its ad money fell to 20pc per year form 56pc per year a year ago.
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This is indeed a good step forward for the company, and it is being anticipated that Microsoft will soon start pushing their premium business features with LinkedIn in the days to follow.
