(MarketWatch) Microsoft Chief Executive Satya Nadella, appears to be following Microsoft’s tradition of overpaying for acquisitions in purchase of LinkedIn. Microsoft Corp. has a dismal history of overpaying for huge acquisitions that don’t work out, and Chief Executive Satya Nadella’s first large purchase as chief executive doesn’t appear to definitively break that trend.
Microsoft MSFT, -2.60% announced a surprise $26.2 billion acquisition Monday of professional social network LinkedIn Corp. LNKD, +0.02% The move elicits memories of Microsoft attempting to buy Yahoo Inc. YHOO, +0.93% for more than $44 billion in 2008, after the dot-com boom came crashing down and the competitors that would eventually surpass the internet portal—Alphabet Inc.’s GOOG, -0.15% GOOGL, -0.18% Google and Facebook Inc. FB, +0.25% —had started to rise. Now, Yahoo’s core assets are up for sale and reportedly fetching bids around $5 billion.
Similarly to Yahoo in 2008, other social-networking companies have surpassed their peak valuations in the minds of most investors, as long as they aren’t named Facebook. LinkedIn seemed to reach its peak last year, before a massive fall in February stemming from a confusing earnings report and explanation. Microsoft is paying a whopping 50% premium for LinkedIn, but by some accounts it could be seen as swooping in while LinkedIn is down, thanks to continued concerns about slowing growth.
