LinkedIn’s Latest Surprising Strategy

LinkedIn (NYSE: LNKD  ) has been throwing some unexpected punches lately. In November, the company took a page out of Twitter’s social media handbook and unveiled the option to follow corporate celebrities. Now, as the business passes the 200-million-user mark, a new LinkedIn report is buzzing around the internet and it’s a little closer to Amazon’s style than Facebook.

According to reports, LinkedIn is in talks to buy out Pulse, a mobile news reader application, for between $50 million and $100 million. What’s the motive behind this new move, and could it help LinkedIn become an even more powerful investment?

Explaining the Pulse?
So why is LinkedIn choosing now to try taking Pulse? As it happens, the timing behind the possible buyout has less to do with LinkedIn’s intentions than that of the startup. The news reader has been in talks with several other high-profile tech companies, including Microsoft, which previously worked with Pulse to build a mobile web app, and Yahoo!.

These two companies might be huge names in the tech world, but right now LinkedIn is touting more power in the realm of social media content, which still has yet to reach its peak in popularity. Pulse has recently broadened its horizons into the realm of social and video feeds, and LinkedIn’s uniquely professional experience could be the perfect platform for the startup’s news bites.

Expanding the brand
LinkedIn isn’t just jumping on Pulse because it’s the popular thing to do. The company has worked hard to expand its "professional Facebook" identity beyond just that of helping its users land jobs. As CEO Jeff Weiner has stated, the company wants to "put the right business intelligence in front of the right member at the right time." For LinkedIn users who are writers or journalists, Pulse could transform their news feed into a well of potential stories, and for non-writer users, it’s a great way to stay informed without leaving LinkedIn’s facilities.

How it measures up
The recent financial statistics for LinkedIn have been staggeringly impressive, and it is clear that it is riding the top of a massively popular social media wave. In 2012, its annual revenue jumped 86%. As far as cash flow is concerned, LinkedIn brought in $96 million last year, after bringing in an additional $450 million during the previous year. With this kind of money in the company’s coffers, a $50 million-$100 million-sized buyout is doable and, hopefully, with Pulse’s popularity, profitable.

The verdict
Ultimately, any merger between LinkedIn and Pulse is speculative at the moment. However, after looking into LinkedIn’s financials and the intentions of both companies, it’s clear that LinkedIn can afford the deal, and is hungry to expand itself. Pulse, meanwhile, is going strong at 20 million users, but a deal with one of these companies could be enough to put it firmly on the map. If this merger works out, it could be a promising step for both a social media titan and a relative newcomer.


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  • Report this Comment On March 21, 2013, at 7:40 AM, KevinniveK wrote:

    You don't even explain what Pulse does. That's the only "surprise" in this garbage article...motley fool lives up to its name once again

  • Report this Comment On March 21, 2013, at 10:05 AM, Pkylie wrote:

    Yup, Motley and Seeking Alpha are shills on Lnkd's marketing hype payroll.

    Consider this factoid. Linked Insiders sold for $950 Million profit while the company made just $21 Million in profit on $875 Million yearly revenue, or 2.2 % profitability. You get better ROI on munis.

    Insiders sure know what they are doing by cashing out their "Free" options.

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