Microsoft (MSFT) Closes LinkedIn Acquisition For $26.2B

Reportedly, Microsoft Corporation (NASDAQ:MSFT) closed the acquisition of professional networking platform LinkedIn Corporation (NYSE:LNKD) on Thursday for $26.2 billion.

In a blog post, Microsoft CEO Satya Nadella said that the acquisition will bring together two of the world’s leading platforms – a professional cloud and a professional network. Moreover, many of LinkedIn services will also be integrated within Microsoft products for which work has already commenced.

Key Takeaways of the Deal

LinkedIn data and services will be integrated into Microsoft Office and Microsoft Outlook. This will enable LinkedIn members to draft their resumes directly on Microsoft Word. Also, advertisements on LinkedIn will be displayed across various Microsoft properties. Subscribers of Microsoft’s Office 365 will be able to access LinkedIn Learning.

What does this Mean for Microsoft?

Over the past decade, social media marketing has caught the attention of advertisers, given the popularity of the medium among the masses. These platforms offer an excellent media for advertisers to put their message across through display advertisements.

As per a statista.com study, worldwide social media users are estimated to be approximately 2.95 billion by 2020 which is a big opportunity in itself.

LinkedIn currently has 467 million registered users, which Microsoft can take advantage of through display advertisements. Moreover, Microsoft’s plans to integrate several LinkedIn features, which will make the resume drafting and application process seem like a cakewalk for the users.

In a nutshell, more users will equate to more advertising revenues for Microsoft. Moreover, the acquisition will boost Microsoft's presence in the social media market. The deal will also strengthen the company's enterprise business.

However, intensifying competition with the presence of other major social networking sites such as Facebook (NASDAQ:FB) and Alphabet’s (NASDAQ:GOOGL) Google Plus remains a concern.

Stock Performance Overview

Notably, shares of Microsoft have outperformed the broader Zacks Computer Software Services industry over the last three months. While the stock has returned 7.6%, the industry generated a negative return of 0.9%.

The bullish behavior of the stock could be primarily attributed to strong cloud growth. The continuing enterprise strength, benefits from the Office 365 subscription model, strong growth prospects of Azure and promising new products will continue to generate top-line growth in the remainder of 2016.

Zacks Rank and Key Picks

At present, Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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