Bright acquired by LinkedIn: Will this acquisition help Linkedin?

The 10-year old big boy “LinkedIn” has acquired the 3-year old small boy “Bright”.  LinkedIn is a professional social networking site while Bright is a linking site for job seekers and job givers. With the acquisition costing $120 million dollars in cash and stock, LinkedIn hopes to use the expertise of Bright in using the data for providing job matches, which is part of the recommendations given to LinkedIn to improve its effective running. So, good news for LinkedIn users, you can also get job offers with your LinkedIn accounts! It won’t be a surprise if your rival company gives you a higher package with the same workload.

Is it economically feasible for LinkedIn?

The acquisition has a perfect timing. It has come with the chimes of the fourth quarter 2013 earnings reports. The LinkedIn has earned net income of 38 million dollars on $447.2 million in the last quarter of the year 2013. 18 million users have added accounts to LinkedIn this quarter making its users reach 277 million across the globe. Thankfully, it could match the average number of new accounts LinkedIn attracts. Moreover, it seems that more people are interested in making their career than just writing posts as is evident from Twitter’s accounts of 241 million this December.

But creating new accounts is not keeping pace with people who visit the site often. The number of visitors and the number of pages viewed has declined this year than the previous year. This has a direct link with revenues as 25% of the revenues come from online marketing. The other sources are money paid by employers and HR companies. The 3.8 million net income is not so encouraging. This is evident by the fact that it could attract only 3 cents per share while the last year it was 10 cents per share and revenue generation was 11. 5 million dollars. Ask LinkedIn and they say that it was due to some unavoidable expenses otherwise they would not have got anything less than 39 cents per share this year. And still they managed 447 millions of revenue as only $438 million was expected by the market research analysts. But the management of LinkedIn had expected somewhere between 455-460 million dollars and their expectations have really not been fulfilled.

Future Prospects “Bright”?

It is expected from LinkedIn that some more future acquisitions or mergers may take place to improve the services provided by LinkedIn, though it may cripple the company’s financial system but may pay off in the end for the better. Bright had 63 million visitors in just 3 years and LinkedIn want to use this to its own advantages. Hope this does not deter shareholders from investing as such mergers and acquisitions may slow down revenue growths.