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‘Scary’ reasons why LinkedIn sold to Microsoft (recode.net)
19 points by yuhong on June 26, 2016 | hide | past | web | favorite | 12 comments

LNKD stock was volatile which meant that share price crashes were great opportunities to invest if you believed in the long-term dominance of the company. I "loaded the boat" when it fell to $100/share. There's little doubt in my mind it would have made it back to $196/share (which was about my estimate for fair value) with or without MSFT, although it got there much faster this way. Curiously the stock is trading about 3% below the all-cash offer price so I guess that Wall Street believes there's a small but non-zero chance the deal doesn't happen.

To save you a click, here are the three reasons:

LinkedIn’s stock was struggling.

LinkedIn’s ad business was slowing down.

LinkedIn’s growth was a concern.

Linked in to me seems like myspace. It seems to be full of spam. Its interface seems be still from the mid 2000s. I guess there was no facebook competitor like there was to myspace so they seem to have won.

I had to download the LinkedIn newsfeed blocker it was getting so horrible. Like 90s grandma chain emails horrible. And I work in energy finance / investment banking / hedge funds.

For whom are these reasons "scary"?

Microsoft shareholders

I doubt if they are scared. MSFT had $105B cash and short-term investments at the end of March. Worst case they'll just lose a quarter of their piggy bank.

1) It's totally, completely ludicrous to suggest that billions of dollars are a small amount of money to any existing company. Billions are peanuts to only a handful of governments in the world.

2) I'm a MSFT shareholder, and I'm scared. I'm not at all scared that the company will fail. I'm scared that my stock will be worth a lot less, and I won't be able to liquidate it without losing a bunch of my money.

3) The "piggy bank" is the shareholder value. That's where we get our dividends, and stocks have no value without dividends.

4) It doesn't matter what the effect of the purchase is on Microsoft, at least not to a shareholder. The market decides what the stock is worth, and the market thinks short-term and irrationally.

Even if the investment is completely written off, that is just 7% of the mkt cap. It's not going to kill Microsoft. I think you should be more worried about the woman who just won a judgement of $10k for being forced to upgrade to win 10.

> since LinkedIn may now be able to sell ads alongside Microsoft Office’s suite of products that reach a lot more people than LinkedIn’s current user base.

And OpenOffice rejoiced.

In what ways are those reasons "scary", and to whom are they scary?

Seems link LinkedIn got a good offer, and did not sell out of fear.

It's like trying to sell your house in 2009.

You know it used to be worth a lot more, and may be again someday, but it's uncertain. You suddenly get an offer that's higher than the current market, so you take it since you have no real confidence the market will be back to its former levels in the next decade. Yes it's a good offer for the moment, but there's still an element of fear/uncertainty driving the decision.

It's also potentially scary to Microsoft since they may have paid a price that's well above anything the market will ever see again.

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