Microsoft Stock on a Strong Footing
Microsoft Corporation (NASDAQ:MSFT) has been in the news over its deal with LinkedIn Corp (NYSE:LNKD) since salesforce.com, inc. (NYSE:CRM) decided to press regulators to block the deal, as it threatened competition.
MSFT stock had come under pressure, as this could have raised more questions about the deal. However, reports that came in yesterday brought some clarity on the matter.
According to sources, Microsoft is set to gain European Union (EU) approval for its $26.0-billion buy of professional social network LinkedIn, with changes in concessions aimed at addressing competition concerns.
Microsoft told the European Commission last week that it would allow rivals of LinkedIn to access its software, such as its “Outlook” program, and give hardware makers the option of installing competing professional social networks on computers after the acquisition. (Source: “Exclusive: Microsoft set to win EU approval for LinkedIn buy – sources,” Reuters, November 23, 2016).
Microsoft announced in June of this year that it will acquire LinkedIn for $196.0 per share in an all-cash transaction valued at $26.2 billion. The company further stated that LinkedIn will retain its distinct brand and independence. Microsoft stock was looking for new growth opportunities and this deal promised that.
The LinkedIn deal, which is the company’s largest acquisition, is important to Microsoft as it will lead to the addition of sales, marketing, and recruiting services to its core products. The company’s proposal of concessions is a sign of how significant the LinkedIn data pool is for the future growth of Microsoft and MSFT stock.
The European Commission is scheduled to decide on the deal by December 6. But Salesforce wants more scrutiny. Burke Norton, Chief Legal Officer of the cloud company said, “We believe this deal raises significant antitrust and data privacy issues.” According to Norton, Microsoft’s exclusive access to metadata will confer an unfair advantage over competitors. (Source: “Microsoft Offers Concessions to Win EU Approval of LinkedIn Deal,” The Wall Street Journal, November 22, 2016.)
Last month, Microsoft posted upbeat first-quarter numbers. Its cloud business was gaining strength and the revenue from “Microsoft Azure” grew by 116%. Microsoft stock touched an all-time high on announcement of this result.
There is lot of excitement over the Black Friday deals on “Microsoft Surface Books” and “Xbox” games, and the sales numbers are likely to boost MSFT stock. However, the focus will now be on what further concessions the company offers to get the deal approved.