A history of bad decisions
Microsoft’s announcement that they will purchase LinkedIn for $26.2 billion—the single largest acquisition in Microsoft’s history—has raised eyebrows as to the wisdom of this acquisition, and Microsoft’s valuation of LinkedIn. In February, LinkedIn’s shares fell by half after the company issued an underwhelming 2016 forecast, and Microsoft’s purchase price is roughly seven times LinkedIn’s 2016 revenue, leading some analysts to ponder whether Microsoft has overpaid.
Microsoft—and the IT sector as a whole—has a history of staggeringly bad acquisitions that, through poor integration or management, result in substantive markdowns. These acquisitions lead to the dissolution of teams through layoffs, and the premature discontinuation of products.