There is an interesting post over at Mashable about the failure of Tumblr to make any progress in righting the ship at Yahoo. The author makes the argument that Yahoo, and Marissa Meyer, somehow “derailed” Tumblr, when the reality is that Tumblr was a money burning machine about to go bankrupt without yet another infusion of financing when Yahoo rode to the “rescue” with a billion dollar buyout offer. Most analysts expect Yahoo to write off every single dollar related to the acquisition. In other words, it was a billion dollar waste of money.
Microsoft’s $26 Billion Blunder
This brings us to this week’s stunning blunder by Microsoft. The company announced that it would pay $26 billion to acquire LinkedIn. LinkedIn, like Tumblr, does not make a profit, though it isn’t teetering on the verge of shutdown. LinkedIn, like Tumblr, has a very specific user base that has peaked. The company reported a $66 million loss for last quarter, and a loss of $166 million for 2015. In other words, Microsoft just paid billions of dollars for a company that will cost it hundreds of millions of dollars.
The truly bizarre part of this acquisition is that Microsoft’s current CEO, came on board while Microsoft was realizing how big of a mistake it made spending billions of dollars to acquire Nokia. Like Yahoo, Microsoft has written down (considered a loss) almost all of its acquisition costs.
According to Microsoft, LinkedIn “fits” within its Office 365 product line somehow. So far, all I’ve heard is that some things might feed into Outlook somehow, although every bit of that can already be accomplished by anyone who wants to without Outlook.
I wish I had more time right now to delve into how truly bad this acquisition is. The reality is that there is virtually no useful integration to be had between Microsoft and LinkedIn, even with the Office365 suite. Maybe I’ll have time to do a deeper dive later on. But, I wanted to get this posted so that I have a place to link my “I told you so” article, because in just a few years time, we’ll all be writing articles about how Microsoft is writing down the entire cost of this $26 billion blunder.
I wonder how the new CEO of Microsoft at that time will work to unwind the damage.