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LinkedIn outlines lower-than-expected forecast; shares tumble

Last updated: 13:06 07 Feb 2014 GMT, First published: 14:06 07 Feb 2014 GMT

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LinkedIn Corp. (NYSE:LNKD), the world's biggest professional-networking website, slumped in pre-market trading after saying sales growth will slow for a fifth consecutive quarter, more than Wall Street envisioned.

LinkedIn shares fell 7.4 percent to $206.11 at 8:12 a.m. in New York. The stock had gained 3 percent this year through the close of regular trading yesterday.

Sales will be $455 million to $460 million in the first three months of this year, the Mountain View, California-based company said in a statement yesterday. Analysts predicted revenue of $469.4 million, according to Bloomberg. Based on the midpoint of its first-quarter forecast, revenue in the January-to-March period will increase about 41 percent, down from 72 percent growth in the same period a year earlier.

For 2014, the company projects revenue of between $2.02 billion and $2.05 billion, below the average analyst expectation of $2.16 billion, according to Thomson Reuters.

The lower-than-expected outlook came one day after another social network, Twitter Inc. (NYSE:TWTR), reported slowing user growth and declining use by some measures. By contrast, Facebook Inc. (NASDAQ:FB) last week reported revenue that topped analysts’ estimates. 

For the fourth quarter, net income declined 67 percent to $3.78 million, or 3 cents a share, from $11.5 million, or 10 cents a share, in the year-earlier period. Excluding certain expenses, LinkedIn said it would have earned 39 cents per share—a penny above analyst projections. Sales in the period climbed 47 percent to $447.2 million, also surpassing the $437.6 million analyst estimate.

Membership jumped 37 percent to 277 million at the end of December, from 202 million a year earlier, when the number of users increased by 39 percent.

"Solid fourth quarter performance capped another successful year where improvements in scale and relevance across our platform led to strong member engagement," Chief Executive Officer Jeff Weiner said in the statement. 

Growth slowed in all three of LinkedIn's businesses:  Sales in talent solutions, LinkedIn’s main business, rose 53 percent to $245.6 million, compared with a 90 percent increase in the same period last year; revenue growth in LinkedIn’s advertising business, called marketing solutions, slowed to 36 percent from 68 percent a year earlier; while the premium subscriptions unit increased revenue by 48 percent, down from 79 percent in the same period last year.

In international markets, where LinkedIn faces competition from Viadeo in France and Xing in Germany, sales climbed 54 percent to $176.1 million and represented 39 percent of revenue, up one percentage point from a year earlier.

LinkedIn said that 41 percent of traffic now comes from mobile devices, up from 38 percent in the third quarter and a mere 8 percent in early 2011. Internet companies including Facebook Inc. and Google Inc. have invested heavily in capturing users as they move to smartphones and tablets.

"Moving forward, we are investing significantly in a focused number of long-term initiatives that will allow us to realize our vision to create economic opportunity for every member of the global workforce," said Weiner, who has been at the helm since 2009.

The company said yesterday that it bought Bright Media Corp., an analytics company that helps match candidates with the right employers, for about $120 million in cash and stock.

LinkedIn's shares have more than quadrupled since the 2011 initial public offering, giving the company a market value of $25.05 billion.

 

 

 

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