Jun 15, 2016 11:07 AM EDT

Microsoft Buys LinkedIn Stocks: MSFT Absorbs LNKD, CEO Jeff Weiner Explains Sale

By Jane Reed

The hustle and bustle in the news regarding Microsfot buying LinkedIn stocks have left some people in the industry perplexed. Which is why Jeff Weiner, Chief Executive Officer of LinkedIn, decided to explain the reason behind the sale.

Employees were wondering how the successful social networking and tech company, LinkedIn, went through a curious financial route. Weiner wrote a memorandum to LinkedIn employees this Monday morning to explain the surprising decision about selling the company to Microsoft.

In total, Microsoft bought LinkedIn for $26.2 billion. There is a hidden reason behind the sale. According to CNBC, the company has been struggling regarding stock prices and its reliance on the market. Some analysts even indicated that the company has "over-relied" on stock-based compensation.

On the record, NY Times displayed a time-line that depicts the rise and fall of LinkedIn stocks. In February of this year, LinkedIn's stock dipped more than 40%. The shares have floated at $225 and closed at $100 this to-date.

Microsoft buying LinkedIn stocks helped solve the problem for investors and most importantly, its employees. LinkedIn employees are largely paid in company stocks. Which is why the company's workers are anxious about this sale.

"LinkedIn is among the most aggressive in using share-based compensation - there is no question about that," said Mark Mahaney, a veteran technology analyst at RBC Capital Markets. He explained that Microsoft buying LinkedIn is a saving grace. "If the stock had stayed down, it would have seen employee churn," he said.

Employees relying on stock based compensation would mean a total personal investment of the workers. Since Microsoft has absorbed LinkedIn, Mahaney indicated that the combined company would be following Microsoft's practice. Which means employees may not be enjoying stock-based happiness. Though Weiner insisted that the deal was not focused solely on stocks but more on the company's trend. Utimately, the executive decision resulted in LinkedIn having a better competitive advantage if linked with Microsoft.

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