Beijing June 14 news, technology giant Microsoft announced will be $ 26.2 billion (about 172.5 billion yuan) acquisition of the world's professional networking site LinkedIn LinkedIn, LinkedIn and Microsoft have entered into a definitive agreement on this transaction, the purchase price per share $ 1.96, paid in cash.
After the acquisition deal was announced, Microsoft CEO Satir & middot; Nadella, president Brad & middot; Smith (Brad Smith), CFO Amy & middot; Hood (Amy Hood), LinkedIn CEO Jeff & middot; Weiner (Jeff Weiner) and other executives on both sides jointly held a conference call with analysts, interpretation of the two sides reached the deal consideration behind and answer questions from Wall Street analysts.
The following is a question and answer session analysts main content:
UBS analyst: Satir, before you in terms of large-scale mergers and acquisitions relative performance is not very good, so why decided to buy LinkedIn? Jeff, now on the market one of the biggest concerns is LinkedIn company's growth slowed, I want to know why you are confident that the company will return to accelerate growth?
Nadella: I'm thinking when major M & A transactions will see three aspects: The first goal was trading can bring us much market size, it can help us to enter new markets, or to help us in the existing expand market share? Second, whether the acquisition can bring in addition to technology and enhance the usage other than the long-term positive factors? Third, the acquisition whether Microsoft's core business and values fit, is not able to strengthen Microsoft's market position, is not part of Microsoft's implementation of the strongest fields.
And LinkedIn in these three areas are in line with, if you look at Office 365, Dynamics and LinkedIn business prospects after the combination of the three, is in line with Microsoft's core value proposition of cloud computing business is our strong momentum in most areas, if the plus acquisition LinkedIn brings cloud computing assets, bringing not only increased services, as well as a strong network of services, which will give us the best chance of long-term liquidity, such as you see now CRM ( customer management system) market, which has provided more than just a CRM service, as well as e-commerce capabilities to bear sociability, these industry trends of change is now, after all we can do with LinkedIn, which is why I remain optimistic s reason.
Another point I also communicate with Jeff, that is the structure of the company after the transaction, based on our past experience, I certainly hope LinkedIn after being acquired can still maintain their culture, brand, network, etc., while maintaining the independence of these at the same time, we have to integrate the customer's terms, this is what we can do, if you look at Jeff and I conceived all scenes, the principles of acquisition integration, not change the nature of LinkedIn, but rather stimulate Microsoft and LinkedIn respective best side, but in terms of implementation, in fact, obstacles faced by this acquisition are lower than our previous large-scale M & a projects.
Weiner: growth, I think in two ways, first of all aspects of the network and the user experience overall, followed by about customer experience and business opportunities. On the first point, the two companies' alliance has significant opportunities for economies of scale, our network has 433 million total users and more than one hundred million monthly active users, we can put these users with Microsoft worldwide more than 1 billion of users to seamlessly integrate, and can take our user's social elements, such as their professional identity and Microsoft specific product combination, such as Outlook and Calendar, Office, Windows, Skype, Dynamics and the like.
For business development opportunities in this respect we are very excited, to some extent, this is actually the most basic level of the transaction, because each of our two companies will butt users will learn more about this property users more, users can stream a stronger connection and a more active relationship, for paying users can add more functionality while adding more enterprise marketing solutions and more advertising inventory, customers need data add more accurate data.
I restore confidence to the company's growth accelerated in the second point of origin from the client side, Nadella also mentioned, thanks to Microsoft's entrenched position in existing markets, the two companies merged to expand the company's existing business and markets, can bring more value and have the opportunity to reduce customer turnover rate.
Analyst: My first question is about Microsoft's earnings guidance of commercial cloud services, cloud services business is expected of you before the 2018 fiscal year revenue to reach $ 20 billion in annual revenue, then the LinkedIn acquisition will affect you Prediction?
Second, LinkedIn machine learning and predictive analytics, the value proposition for the Microsoft Office, Office and willingness to pay LinkedIn users does it help?
Nadella: Let me answer the second question, I think the opportunity analysis and machine learning is very large, a variety of analysis functions is one of the advantages of differentiation inside Office 365 Office 365, the two companies integrated in this regard Microsoft Graph is based on an existing add more insight into the ability, LinkedIn now has a database, combining these two aspects is our strength in machine learning and artificial intelligence.
I am more looking forward to the second aspect is the development of LinkedIn information flow function, every day I visit these information will be on LinkedIn, my traffic based on a variety of information on the home page of my push is accurate personalized content, imagine if I was doing and then add project information, my work calendar and schedule information, I want to see next month and the company's information can be related to the flow of information and advertising to further enhance accuracy.
Hood: $ 20 billion for fiscal year 2018 goal of commercial cloud services, as we did not take into account the impact of such a large acquisition, as of April this year, we are still at the track to achieve this goal in time to develop on according to plan, in fact, today with LinkedIn, to achieve this goal my faith more than ever, it is able to accelerate our realization of this goal.
Goldman Sachs analyst: I want to know before the merger, what LinkedIn corporate clients sales strategy is? How will you take advantage of Microsoft's enterprise sales team to maximize revenue?
Weiner: We have two main sales channels, one LinkedIn own field sales team to go, but for a customer's online self-service system, our services have some really need to sell the team to communicate and interact with customers, such as our corporate recruitment services products, we have more than 40,000 corporate clients.
We have an ad sales team to sell our enterprise customer marketing solutions, we can now develop more ad inventory from Microsoft ecosystem, this is another opportunity. LinkedIn also Sales Navigator, Microsoft has Dynamics, we think the opportunity here is also great.
Analyst: This transaction performance data in terms of LinkedIn you have requested, such as the number of users and activity, the utilization rate of growth?
Nadella: we will track and measure the progress of the transaction and integration of some of the KPI set, until the completion of the transaction when we will share more, I think whether Office 365, Dynamics or LinkedIn, the most important is the user usage and satisfaction, because the liquidity of these is itself embedded in usage among users.
Hood: If you ask before the deal we have not developed KPI requirements, no.
CLSA analyst: I want to know in terms of analysis, LinkedIn and Microsoft What's the difference? You schedule different products and services in the integration of this is what? In cash terms, do you think the combination of the two companies can increase up-sell opportunity to raise prices of products and services, or just have a quality of service to existing customers has been strengthened?
Nadella: Graph of our core values is the development of large-scale machine learning and artificial intelligence technology, which is the core of the next wave of technological development, however, to achieve this, we need the data, LinkedIn is a leading global career social networks have a lot of data, Microsoft Graph existing data from Office 365 and Dynamics, data and LinkedIn are complementary.
Hood: acquisitions of the economic value of LinkedIn, I think there are two basic levels, the many LinkedIn scene analysis function for Microsoft is a net increase, this can not be regarded as an additional sales opportunities, mainly to increase new revenue and the value of customer subscription service. The second point is that now analysis inside ARPU (average revenue per user contribution) is the highest Office 365, you can bring with LinkedIn to further enhance the ARPU.
Bank of America analyst: Do you think LinkedIn and Microsoft products to obtain maximum synergy is what? Second, how should we view your consolidated security issues, because the information on a LinkedIn basically disclosed, but Office 365 is relatively private information, if you integrate the two, what information you will allow the public to view, and which are not meeting? Such decisions affect your long-term view of their synergy?
Nadella: Let me answer the second question, most of LinkedIn's information is public information, and Office 365 is the user's own information, we will not in any case where the user data licensing and IT industry support in principle is not obtained connection, which is the user's information, that is, after we get through the merger of what information determined by the user, we think users will choose to open up, because it will bring many benefits to them. In information security, we are very cautious.
Synergies regard, Microsoft took the value of LinkedIn is, to say the most basic, Microsoft can add more exposure to LinkedIn and distribution, LinkedIn users will be more convenient, such as Office, the browser, Cortana one-click login LinkedIn, etc., followed by a synergistic effect can also be obtained from the stream before I mentioned aspects, such as the user can share your Calendar information to LinkedIn information stream makes its push content more relevant and so on, which are very fast can be achieved.
Royal Bank of Canada analyst: LinkedIn's revenue from two-thirds of business talent solutions, and as an independent business is growing, I want to know if Microsoft will integrate it into your being is human resources management software We can not help them get more clients?
Nadella: Yes, this for us is a very worth looking forward to the opportunity, and now the company has been involved in Dynamics CRM and ERP services, we will do so the next step is to study the LinkedIn in talent management products and service, look at how it might combine with Dynamics.
Analyst: In the future management and operation of LinkedIn business, you need a minimum cash is how much?
Hood: According to the company's cash reserves now, I think the company's investment in capital can still be very strong, whether it is to build the company's commercial products, or acquisitions to stay competitive in terms of investment or return capital to shareholders, we have a very large flexibility.