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Comment by mrweasel | Hacker News Reader

It think the negativity is mostly due to the price tag. If I was a shareholder I would be furious over Microsoft paying $26billion for a money losing company. Even if Microsoft see some potential the rest of us aren't, and we have to assume that they are, they still need to find a way to turn a profit on the deal.

Given that they bought Nokia, only to shut it down, more or less, it would be reasonable for the shareholders to get a plan, detailing how LinkedIn will boost Microsofts business, with more that the $26 billion.

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I wonder how much of the value was attributed to vanity metrics like the number of times people check the site? An inflated number since LinkedIn started using short term exploitation tactics like sending Notification Badges for your contacts' Birthdays and Work Anniversaries. Personally I also feel fleeced out of an outrageous monthly subscription that was sneaked through an undeclared AppStore transaction (I got >50% of the money back but not all). At this point I'm planning on deleting my account.

Can you talk more about this sneaked-in subscription? That's really concerning.

Did you consider suing? It's the only way to reach today's modern corporation.

Or you know, you could post it here and I bet you can find someone who works for the company.

Why? Dark patterns are intentional, you know. That's theft, as if they stole your wallet.

You don't accidentally bill people for a subscription service - and if you did you'd reverse it the instant you discovered it, not try to hide.

Save your righteous mercy for people who steal from you.

I think first thing to happen is lot of linked in employees getting fired. Since linked in employs a lot of people.

Guess where they'll be updating their resumes?

Yeah, even assuming Microsoft cuts losses and makes the company profitable again through some product integrations, it's still a huge price tag.

LinkedIn has stalled growth and brought in $2.9 billion in rev last year, which means that all things constant it will take nine years to cover the $26 B price tag.

Microsoft must really have some big plans for it to justify the costs.

That's not actually that bad, if that revenue were profit. Plugging it into a discounted cash flow calculator, this investment breaks even at a discount rate of 11%, which is much better than Microsoft could get elsewhere. At a discount rate of 3%, they'd only need to generate about $750M in profit to break even.

Problem is that revenue isn't profit, and LinkedIn is currently losing money, which makes their financial value negative. So Microsoft must be assuming one of three things:

1) LinkedIn will continue to grow, enough to raise revenues by a billion or so with minimal marginal expenditures.

2) They can cut costs enough to get to ~25% margins without losing market share.

3) There's strategic value when combined with Microsoft's existing business.

Any one of these seems like a reasonable (though far from guaranteed) bet.

Eh, I gave them the benefit of the doubt and figured they were valuating based on price/sales ratio, since earnings have been negative lately and that's probably the only way to come close to the 26B number.

With all things constant it will take a lot more than 9 years. The 2.9 billion in revenue doesn't account for the costs of running their business. Microsoft would need to make 26 billion in profit to cover the price tag.

Even more than that when considering the opportunity cost of not putting $26B into a stable investment vehicle.

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