Chowdhry: Microsoft Is A 'Dead Stock' With No Revenue Catalyst

Trip Chowdhry of Global Equities Research is not a fan of Microsoft Corporation MSFT's $26.2 billion acquisition of LinkedIn Corp LNKD.

In an email to clients, Chowdhry suggested Microsoft's acquisition will "likely fail" as part of its ecosystem. Specifically, the analyst noted that he has been tracking social media companies for seven years and in the second quarter of this year the sector experienced a "significant" shift.

Specifically, Chowdhry noted the second quarter of 2016 saw 1) a significant uptick in M&A activity, 2) an uptick in layoffs in the industry, and 3) significant management reshuffling.

"Taking all the above together: Industry Structure is fast changing, and investment thesis in Social Media Sector many need a refresh," the analyst wrote.

Related Link: Good For LinkedIn, 'Terrible' For Microsoft

Chowdhry continued that Microsoft has developed a track record of having "zero insights" in its acquisitions. As an example, Microsoft was an early investor in Facebook Inc FB when it was still a private company and justified its investment by suggested that Facebook users could use Microsoft Office to communicate with each other.

"This reasoning was a total BS," the analyst said.

As another example, Microsoft entered into a partnership with an India-based internet cafe chain called Satyam Infoline. The company's justification for the partnership was based on the theory that India's massive 1.2 billion population will have greater access to Microsoft.

"People do not go to Internet cafes to use MSFT Office," Nadella also argued. ... Fast Forward today ...this reasoning was also a total BS..."

Bottom line, Microsoft's justification to acquire LinkedIn is also "full of BS" and "all smoke and mirrors." Just like in the prior examples, Microsoft's "fixation" on combining its Office product with LinkedIn's platform "is the reason they continue to fail."