I have been thinking about how I feel about Microsoft’s recent purchase of LinkedIn – and whether or not  I feel good about it.   I am neither a shareholder in Microsoft or LinkedIn, so I am a casual observer, but I was trying to decide if this gets me interested in becoming a holder of Microsoft stock again.

After much thought – I think I agree with this guy’s sentiment – I just don’t get it.  Maybe there is a master plan where LinkedIn is the missing link that can help glue Microsoft’s units together, but I cant figure it out.

Maybe LinkedIn will integrate with Bing for a people search?  Will LinkedIn and Outlook be integrated/merged?  Maybe by moving Linked In to run under their cloud service ‘Azure’ they can grow Azure and reduce costs at LinkedIn?  Hopefully someone in Redmond has a master plan – but I am not sure Microsoft yet gets the benefit of the doubt on acquisitions after the disastrous Nokia and aQuantive buys.

I was heartened to see that Microsoft plans to keep LinkedIn as a separate entity – similar to the Berkshire Hathaway model, so maybe Microsoft felt it was a good undervalued investment that may come in handy in the future – but paying a 48% premium over the market value of the company kind of takes the ‘undervalued’ out of the equation.

One other nit – Microsoft plans to borrow to finance the $26 billion acquisition, even though they have $100 billion in cash sitting around.  Why?  Because 97% of this cash is offshore, and they would have to pay taxes to bring it onshore.  Yeah I know they could probably issue bonds in the 3-4% range, so it probably makes sense, assuming they are holding out for some tax holiday on foreign earnings before repatriating that money.  It just feels a little too slick to financial engineer it that way, especially if LinkedIn was primarily just an investment.

So I guess the answer I was looking for is No – this doesn’t get me excited about buying Microsoft stock.  As usual I could be wrong, but I am in wait-and-see mode until Microsoft clarifies it’s strategy.

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