Microsoft Corporation (MSFT) shareholders awoke Monday morning to some incredible news that MSFT had bought LinkedIn (LNKD) for $26.2 billion. While LNKD stock surged 46.6% on the unexpected news, MSFT stock was down 2.6% on Monday.
MSFT shareholders are understandably leery of such a large asking price for LNKD.
The LNKD deal is one of the biggest internet mergers of all time, but it’s one of several huge MSFT buyouts in recent years. How did the five biggest deals turn out? Here’s a look back.
5. MSFT buys Mojang for $2.5 billion (2014)
MSFT acquired Mojang, makers of the hit mobile video game “Minecraft,” in an attempt to lure customers to its struggling Windows smartphone system. From 2009 to 2014, “Minecraft” had sold more than 50 million copies across smartphone, PC and videogame console platforms. Unfortunately for shareholders, MSFT continues to lose traction in the smartphone market, and not even Mojang could make Windows phones competitive with Apple (AAPL) or Alphabet (GOOGL) devices.
4. MSFT buys aQuantive for $6.3 billion (2007)
MSFT’s buyout of aQuantive was the company’s attempt to compete with online advertising giants GOOGL and Yahoo! (YHOO). MSFT paid an 85% premium for aQuantive, and the strategy of aggressively going after internet advertising revenue proved very fruitful for GOOGL and Facebook (FB). Unfortunately, MSFT backed the wrong horse. The company wrote off almost the entire value of aQuantive only a few years later.
3. MSFT buys Nokia (NOK)’s mobile phone unit for $7.2 billion (2013)
As mentioned previously, MSFT’s venture into the smartphone market has been a major flop. Three years after the buyout, MSFT and NOK have sold a total of 110 million Windows Phones compared to the 4.5 billion iOS and Android phones sold during the same period. After years of heavy investment into Windows Phone, the devices currently make up roughly 1% of total smartphone sales. MSFT has yet to officially throw in the towel on the devices, but to say they are off to a slow start would be quite an understatement.
2. MSFT buys Skype for $8.5 billion (2011)
There’s no official data on how much (if any) revenue Skype has brought in for MSFT, but there’s no question that it has been a successful acquisition. Skype immediately gave MSFT a major presence in the instant messaging and voice and video chat markets. When MSFT acquired Skype, it had 196 million users. That number has reportedly grown to more than 300 million, and global users now spend roughly 3 billion minutes per day on Skype’s platform.
1. MSFT buys LNKD for $26.2 billion (2016)
While the LNKD buyout is not MSFT’s first major purchase, it is by far its largest. What is MSFT thinking? LNKD has more than 433 million users and a much more professional environment than the social media platforms of FB or Twitter (TWTR). MSFT has never has the social media piece of the puzzle. Management is hoping that LNKD’s professional tilt is ideal for integrating the professional services and software at the core of MSFT’s business.
Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.