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22 June 2016 @ 06:18 pm
Microsoft buys LinkedIn for $26.2B  
That was unexpected and I even thought it is a joke. But it is not a joke.

Why would Microsoft buy the largest job board?
Microsoft is in a different business.


Responses:
1) What a terrible time to be burning that much cash, just before the next recession, and on a resume site. I was starting to see some good things coming from Microsoft but this makes me shake my head and question leadership big time.

2) I suspect major LinkedIn investors shopped around the company and financial-engineered a sophisticated kickback
 
 
 
Валерий Крылов: flowjusty_tylor on June 22nd, 2016 10:31 pm (UTC)
After IPO it's always the same "bubble business".
Dennis Gorelikdennisgorelik on June 22nd, 2016 11:20 pm (UTC)
What do you mean under "bubble business"?
Валерий Крылов: flowjusty_tylor on June 22nd, 2016 11:44 pm (UTC)
Increasing market cap instead of increasing actual profits.
(no subject) - dennisgorelik on June 23rd, 2016 12:07 am (UTC) (Expand)
(no subject) - justy_tylor on June 23rd, 2016 12:27 am (UTC) (Expand)
anhinga_anhingaanhinga_anhinga on June 23rd, 2016 12:21 am (UTC)
One of the problems with the current system is that merger-and-acquisition bonuses for executives distort the decision-making process quite a bit...
Dennis Gorelikdennisgorelik on June 23rd, 2016 12:30 am (UTC)
What is the typical merger-and-acquisition bonuses?

Especially on the buyer's side: what kind of bonuses managers of the buying company gets?

Edited at 2016-06-23 12:30 am (UTC)
anhinga_anhingaanhinga_anhinga on June 23rd, 2016 02:16 am (UTC)
Indeed... I should actually research this better...

In any case, 12 years ago it was this:

http://www.law.harvard.edu/programs/corp_gov/papers/04.grinstein.ceo-compensation.pdf

So, it was not always, but only in 39% of the cases (although with a great correlation with the power of a CEO over the board), and for large acquisitions it was between 5 and 14 million.

(The trends like this are all upwards, I presume, but this "39% number" means that one needs to research a specific company before making an accusation like the one I am making here...

For the current Microsoft executive it does not seem to be the case that this bonus is built into the compensation structure automatically, and we'll really need to check in a year comparing to these numbers to see if there is a jump: http://www.geekwire.com/2015/microsoft-ceo-satya-nadella-gets-18-3m-in-annual-compensation-as-board-cites-strong-consistent-vision/

And in this case, his long-term package looks like it is structured to protect against short-term temptations... So I might be wrong applying this thinking to this particular case, even if it is a concern in general...)
Dennis Gorelikdennisgorelik on June 23rd, 2016 04:24 am (UTC)
Executives motivation for merging
---http://www.law.harvard.edu/programs/corp_gov/papers/04.grinstein.ceo-compensation.pdf
a manager who acquires another company spends extra
time and effort in constructing the deal, and therefore can use the task as a justification for
additional compensation.
---

1) Create busywork for yourself.
2) Ask for higher compensation.
3) Profit.

> http://www.geekwire.com/2015/microsoft-ceo-satya-nadella-gets-18-3m-in-annual-compensation-as-board-cites-strong-consistent-vision/
> his long-term package looks like it is structured to protect against short-term temptations

Where exactly can I see that Nadella's long term package is structured to protect against temptations?

If his bonus is a share of absolute Microsoft profit, then merging with other companies would increase Nadella's compensation even if shareholders would lose money due to merge with LinkedIn.
Re: Executives motivation for merging - anhinga_anhinga on June 23rd, 2016 05:47 am (UTC) (Expand)
Re: Executives motivation for merging - dennisgorelik on June 23rd, 2016 05:56 am (UTC) (Expand)
Re: Executives motivation for merging - anhinga_anhinga on June 23rd, 2016 01:00 pm (UTC) (Expand)
Re: Executives motivation for merging - dennisgorelik on June 23rd, 2016 01:11 pm (UTC) (Expand)
Re: Executives motivation for merging - anhinga_anhinga on June 23rd, 2016 01:27 pm (UTC) (Expand)
Re: Executives motivation for merging - dennisgorelik on June 23rd, 2016 08:35 pm (UTC) (Expand)
Re: Executives motivation for merging - anhinga_anhinga on June 23rd, 2016 08:53 pm (UTC) (Expand)
Re: Executives motivation for merging - dennisgorelik on June 23rd, 2016 10:32 pm (UTC) (Expand)
Re: Executives motivation for merging - anhinga_anhinga on June 24th, 2016 02:13 am (UTC) (Expand)
herve joncourhervejoncour on June 23rd, 2016 01:57 am (UTC)
It's insane, this LinkedIn is a website which sends stupid messages to your mailbox once in while even though the last time you visited it 10 years ago.

I have no idea what MSFT will gain by acquiring LinkedIn. At least with Nokia there was an idea of moving into the handheld market.

26B$ for a web site ...

I just read a wonderful quote recently " ... we were promised people on Mars and got 140 characters ..."
Dennis Gorelikdennisgorelik on June 23rd, 2016 04:27 am (UTC)
LinkedIn is the largest job board (huge number of candidates profiles). That's where most of its value is.
But Microsoft is paying hefty premium on top of LinkedIn actual value.
herve joncour: pic#118432461hervejoncour on June 23rd, 2016 12:22 pm (UTC)
As well as Monster, Dice etc etc. Microsoft headcount is stable enough, so what are they going to do with all these profiles. Sell it? It's completely different business.
Dennis Gorelikdennisgorelik on June 23rd, 2016 12:26 pm (UTC)
Yes: that's another problem.
There is no good reason for Microsoft to go into job boarding business.

My guess is they think that they would be able to extract huge value from LinkedIn outside of job boarding business.
I think Microsoft is wrong about it.
(no subject) - hervejoncour on June 23rd, 2016 03:04 pm (UTC) (Expand)
(no subject) - dennisgorelik on June 23rd, 2016 08:27 pm (UTC) (Expand)
(no subject) - hervejoncour on June 23rd, 2016 08:38 pm (UTC) (Expand)
(no subject) - dennisgorelik on June 23rd, 2016 10:36 pm (UTC) (Expand)
serjiojitserserjiojitser on June 23rd, 2016 07:07 pm (UTC)
Big Brother watching us
linkedin - единственная соцсеть, где почти все люди сидят под своими родными именами. Это очень нужно спецслужбам, кои весьма сильно сотрудничают с Микрософт (как и с Фейсбук, вконтакте и т.д.)

Конечно это не единственная причина.
Dennis Gorelikdennisgorelik on June 23rd, 2016 08:26 pm (UTC)
Re: Big Brother watching us
Какая разница спецслужбам, кому принадлежит LinkedIn?
serjiojitserserjiojitser on June 24th, 2016 05:17 am (UTC)
Re: Big Brother watching us
С Мелкософтом проще договариваться видимо. Вот такая теория.
Dennis Gorelikdennisgorelik on June 24th, 2016 05:39 am (UTC)
Re: Big Brother watching us
Мне кажется, что с LinkedIn договориться проще, чем с Microsoft.
У Microsoft больше денег, поэтому они более независимые.

Если уж следовать теории заговора, то спецслужбы протолкали этот Microsoft + LinkedIn merge для того, чтобы внедрить своих агентов (уже сидящих в LinkedIn) в Microsoft.
Re: Big Brother watching us - serjiojitser on June 25th, 2016 08:55 pm (UTC) (Expand)
Re: Big Brother watching us - dennisgorelik on June 26th, 2016 12:24 am (UTC) (Expand)
Re: Big Brother watching us - serjiojitser on June 26th, 2016 09:53 pm (UTC) (Expand)
Re: Big Brother watching us - dennisgorelik on June 26th, 2016 10:27 pm (UTC) (Expand)