Will Microsoft’s $26 billion purchase of LinkedIn work?
Software giant has checkered history on megadeal outcomes.
SEATTLE — Microsoft’s $26 billion deal to purchase LinkedIn is the boldest risk the company has taken under Chief Executive Satya Nadella.
The deal, sealed on Thursday, also poses a question: Can Microsoft, formerly hostile to Silicon Valley, scoop up a Bay Area stalwart without breaking it?
LinkedIn gives Microsoft, whose Office and Windows soft ware are default portals for information workers, the leading online resume repository and workplace relationship database for that same crowd.
Microsoft, headquartered outside Seattle, hopes to use the professional social network to improve its software for salespeople and build new applications that combine LinkedIn’s data about relationships with Office’s information about organizations and how people spend their time at work.
But Microsoft has a checkered history when it comes to following through on its plans following megadeals. The purchases of Nokia’s phone unit and digital advertising company aQuantive both resulted in billions of dollars in writedowns.
Microsoft’s position today contrasts with the last time it courted a large Silicon Valley Internet company. Microsoft spent five years trying to buy web pioneer Yahoo, a flirtation that ultimately ended in 2009 with an agreement that Yahoo would use Microsoft’s search technology.
At the time, Microsoft had a tarnished reputation in corners of the technology industry, born of the company’s reputation as a fierce competitor hostile to technologies built outside of its orbit.
The gulf bet ween Microsoft and the rest of the industry was so wide that some executives on both sides of the table in the Yahoo talks were concerned that the internet giant’s rank-and-file employees would revolt at the prospect of rule from Microsoft, according to people involved in the discussions.
The Microsoft of 2016 i sn’t that toxic, analysts and technologists say.
In his nearly three years at the helm, Nadella has pushed the company’s culture to embrace open-source software and other areas dear to Silicon Valley’s heart. A gentler tone, along with a rising stock price and progress in the company’s growing web-based soft ware, has boosted morale at Microsoft.
Still, some LinkedIn employees apparently had the opposite view of the deal. The Glassdoor data indicates a drop in employees’ approval of LinkedIn Chief Executive Jeff Weiner after the deal was announced.
The company has about 470 million members. It posted a profit of $8.6 million during the three months ended in September, the company’s first profitable quarter in nearly two years. Revenue has been surging. LinkedIn’s sales of $959 million during the quarter were up 23 percent from a year earlier.