With billions -- tens of billions, actually -- burning a hole in Microsoft's (NASDAQ:MSFT) pocket now that Yahoo! (NASDAQ:YHOO) is out of the picture, a lot of tempting buyout opportunities await Mr. Softy.

LinkedIn, the business-oriented social networking site, better be high on its list.

LinkedIn completed yet another round of financing yesterday, securing another $53 million from a group of private equity rock stars like Bain Capital. The deal values the site at a cool $1 billion, which may or may not be a fair price for the company.

The site is projected to ring up $100 million in revenue this year, mostly as a result of display ads on profile pages, premium subscriptions, and headhunting tools. It's a more refreshing revenue mix than larger social networking sites that rely almost exclusively on ad revenue.

It's true: LinkedIn isn't the top dog in social networking. With 23 million members, it watches over just a fifth of the user rolls on Facebook and News Corp.'s (NYSE:NWS) MySpace. Snapping up LinkedIn, however, would be more about quality than quantity.

The travails of making mainstream social networking pay have left some pretty big players bellyaching lately.

  • Google (NASDAQ:GOOG) blames social networking, in part, for a rare quarterly miss earlier this year.
  • News Corp. recently slashed its online arm's revenue projection for this year, despite healthy traffic growth at MySpace.
  • Even the creative Facebook has hit potholes in milking more revenue out of its niche.

So why did I suggest that Microsoft buy LinkedIn back in March? And why am I still suggesting it before?

In short, it fits. Where does Microsoft want to be in the future? If it wants to bump up against Google in paid search, it needs to reach the right demographics. It's hard to top LinkedIn's 23 million -- mostly white-collar -- professionals. If it realizes that it'll have to battle Google in cloud computing to keep its Office applications suite relevant, once again, it wouldn't hurt to have 23 million networking adults on its side.

Just as important as how well LinkedIn fits with Microsoft, is how important it is for Mr. Softy to keep it away from everyone else. Google could do a lot of damage with LinkedIn under its arm. Web-based employment sites like Monster (NASDAQ:MNST), Dice (NYSE:DHX), and Yahoo!'s HotJobs could expand their reach dramatically with LinkedIn.

As long as a buyer can further its own agenda without alienating the growing user base, LinkedIn is really the best shot for social networking to deliver high-margin revenue. After several rounds of financing, you know that an IPO or a sellout can't be too far away.

Microsoft, don't be late.

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