Here’s How Satya Nadella Will Try to Revitalize LinkedIn

December 8, 2016, 3:52 PM UTC
Photograph by Getty Images

Microsoft CEO Satya Nadella announced on Thursday that his $26 billion deal to acquire LinkedIn was complete. Appropriately, Nadella’s blog post appeared on LinkedIn’s publishing platform.

But after getting all the required regulatory approvals and money transfers squared away, Nadella’s real work is just beginning: ensuring that buying LinkedIn was worth $26 billion to Microsoft shareholders.

After all, pre-Nadella Microsoft (MSFT) had a pretty mixed record on large acquisitions. Previous CEO Steve Ballmer wasted $6 billion on digital advertising company aQuantive and set the $7 billion deal for phone maker Nokia in motion. Luckily for Microsoft, Yahoo (YHOO) rejected his $48 billion offer in 2008. Some earlier deals turned out much better, like the $400 million spent on Hotmail.

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With those warning signs, it’s not easy to see how owning LinkedIn makes Microsoft much more valuable. Nadella tried to spell out the case in his post on Thursday. “Our top priority is to accelerate LinkedIn’s growth, by adding value for every LinkedIn member,” Nadella wrote.

That’s certainly what LinkedIn needs. Recall that just before Nadella’s takeover offer, LinkedIn’s stock price had tanked because of dramatically slowing revenue growth. After growing 35% in 2015, revenue was forecast to rise 20% this year and only 15% in 2017. But will Nadella’s efforts to add value for LinkedIn users make enough of an impact?

In his blog post, he offered a variety of upcoming integrations such as allowing a user to update their LinkedIn profile from a resume drafted in Microsoft Word. And LinkedIn content, like its sponsored essays and online learning, could be spread across all Microsoft web properties.

Read more: Satya Nadella: The Man Who Is Transforming Microsoft

Greater distribution could bring in more ad revenue, but the larger question may be whether LinkedIn’s audience has much more room to grow. And LinkedIn’s services, such as helping executive recruiters find job candidates, seem rather niche-y and limited compared to the kinds of broad software that have been Microsoft’s forte.

Still, the LinkedIn platform of professionals could be a ready market for a range of current and future Microsoft cloud services. And the integration of that vast network with Active Directory, Outlook and other Microsoft identity-based services also could be a long term winner.

For more on the LinkedIn acquisition, watch:

With so many possibilities for success still at least possible, Nadella’s last words will suffice as the last word on the deal for today: “I am energized and optimistic for what we can achieve together and the journey ahead.”

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