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![]() ![]() But the company lost $166 million on $2.9 billion in sales in 2015. If the industry of business social networking were attractive, LinkedIn - which is a leader - would likely enjoy the economies of scale needed to make it profitable. Here's why I believe the deal fails the four tests. An eBook From Forbesįrom PCs to vaccines, find out how Bill Gates made his mark on the world. Now that Microsoft is buying LinkedIn, whether or not Weiner can answer these questions will not matter as much as it once did.īut the deal still begs the question - Does the Microsoft/LinkedIn deal pass the four tests of a successful acquisition?īill Gates: Beyond Microsoft, Money, Malaria. By adding entirely new classes of products, or creating a new growth culture?.By inventing new products for its existing customers?.By selling its current products to new customers, or in new geographies?.Could it be spurred by improving LinkedIn’s offerings?.This slashed a cool $1 billion from the net worth of LinkedIn’s founder, Reid Hoffman, and forced Weiner to ponder important questions that needed to be answered before investors could hope to recoup what they lost. LinkedIn lowered its expectations for the year’s growth in revenue (from 35% to 20%) and adjusted earnings (from 41% to 7%) - well below what analysts expected. The reason was easy to understand, yet difficult to remedy. That was the day investors hacked 44% from LinkedIn's market capitalization. I believe this is a flimsy justification for spending $26.2 billion.īut to understand why it happened, a good place to start is to look what happened to LinkedIn's shares after the stock market opened on February 6, 2016. ![]()
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