LinkedIn is a much bigger and riskier deal than Microsoft has ever done before
Wall Street had mixed reactions to Microsoft's surprise announcement on Monday that it would buy LinkedIn for $26.2 billion. One firm, Jefferies, titled its instant analysis about the deal, "Large Acquisition, Large Valuation, Large Risk," and compared it with past Microsoft acquisitions Skype, Nokia, and aQuantive. "Most would categorize at least two of those three prior acquisitions as missteps, and the third is difficult to assess given the Skype brand expansion within Microsoft," wrote Jefferies.
But LinkedIn is a lot bigger deal than those previous acquisitions, as this chart from Statista shows. As Jefferies writes, "We expect similar results with this acquisition, except this one is much bigger at more than a year of free cash flow, so we'd expect the effect (and the risk) to be that much greater."