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Microsoft Buying Linkedin – Smart Move Or Dumb Move? Better Business FocusFocus DecemberJune 20162015 Paul Sloane Microsoft buying LinkedIn – Smart Move or Dumb Move? for $6B in 2007. It was an attempt professionals and it is the essential Microsoft’s core PC business of office to take on Google in online tool of all recruitment companies. applications and Windows operating advertising and it failed. In 2012 However, LinkedIn’s growth has the value of the business was slowed and it is losing money. Is it systems was in decline so it needed written down to zero. In 2008 in tomorrow’s success or new sources of revenue. It splashed another attempt to take on yesterday’s? Microsoft has paid a out $26bn to buy social media Google Microsoft offered $45B huge premium for the business business LinkedIn. Will this move add for Yahoo. Fortunately for and shareholders must be worried value for Microsoft shareholders or Microsoft the bid was rejected that it will add to the company’s and the company dodged a bullet. litany of failures. destroy it? The omens are not good. Yahoo’s online advertising business is worth very little today. © Copyright, Paul Sloane Business leaders love to flex their muscles and use shareholders’ But Microsoft is not alone in this About the Author: funds to buy other businesses. folly. Google themselves splurged Paul was part of the team which This is despite the evidence that $12B on Motorola’s mobile phone launched the IBM PC in the UK in most acquisitions do not fulfill business which they then sold 1981. He became MD of database their stated aims and many lose three years later for less than company Ashton-Tate. In 1993 money hand over fist. This is $3B. Hewlett Packard spent $11B Paul joined MathSoft, publishers of especially true in the high-tech acquiring Autonomy but had to mathematical software as VP sector which has a catalogue of write off most of that within a International. He became CEO of failed mergers. The most year. Facebook spent a Monactive, a British software notorious example was the remarkable $19B buying company which publishes purchase of Time Warner by AOL WhatsApp – and it is too early to software asset management tools. in 2001 for a massive $164B. It tell if that is money well spent. In 2002 he founded his own was a catastrophe which company, Destination Innovation, ultimately sank both companies To be fair to Microsoft, their $8B which helps organisations improve and has been described as the acquisition of Skype may prove to innovation. He writes and speaks biggest mistake in corporate be a winner. But despite some on lateral thinking and innovation. history. The two companies successes the question remains; His latest book is The Leader’s demerged in 2009. why do companies keep acquiring Guide to Lateral Thinking Skills when the evidence shows that the published by Kogan-Page. Microsoft’s track record in this strategy generally does not work? field is worryingly poor. In 2013, In the case of LinkedIn Microsoft Co-ordinates: its then CEO Steve Ballmer spent gets a business which has 430 $7B acquiring Nokia’s mobile million members and a database of Web: www.destination- phone business when it was clear information which is rich in detail. innovation.com that Apple and Android were Microsoft’s CEO, Satya Nadella, is E-mail: psloane@destination- killing all other competition in the betting that his firm can find innovation.com sector. Within two years most of synergies between this data and Tel: +44 (0)7831 112321 the acquired staff were laid off and Microsoft’s applications. Microsoft took a $10B write- down. This disaster followed LinkedIn is the premier social Ballmer’s purchase of a Quantive network for business 36 Better Business FocusFocus DecemberJune 20162015 Important Notice © Copyright 2016, Bizezia Limited, All Rights Reserved This article appeared in Better Business Focus, published by Bizezia Limited ("the publisher"). It is protected by copyright law and reproduction in whole or in part without the publisher’s written permission is strictly prohibited. The publisher may be contacted at [email protected](+44 (0)1444 884220). The article is published without responsibility by the publisher or any contributing author for any loss howsoever occurring as a consequence of any action which you take, or action which you choose not to take, as a result of this article or any view expressed herein. Whilst it is believed that the information contained in this publication is correct at the time of publication, it is not a substitute for obtaining specific professional advice and no representation or warranty, expressed or implied, is made as to its accuracy or completeness. Any hyperlinks in the article were correct at the time this article was published but may have changed since then. Likewise, later technology may supersede any which are specified in the article. The information is relevant primarily within the United Kingdom but may have application in other locations. These disclaimers and exclusions are governed by and construed in accordance with English Law. Publication issued on 1 December 2016 37 .
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