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LinkedIn's third-quarter loss disappoints investors

The online professional network records first quarterly loss since its IPO despite a 126% increase in revenue. Shares fall 8% in after-hours trading.

November 04, 2011|By Jessica Guynn, Los Angeles Times

Reporting from San Francisco — LinkedIn recorded its first quarterly loss since the online professional network's blockbuster initial public offering in May, pushing the stock down more than 8% in after-hours trading.

The Mountain View, Calif., company also said it planned to sell as much as $100 million worth of its stock.

The loss wasn't as steep as some analysts had predicted. It came as the company increased spending on research and development to attract more users around the globe.

LinkedIn lost $1.6 million, or 2 cents a share. It earned $4 million, or 2 cents, in the third quarter of 2010. If not for certain items, LinkedIn said it would have earned 6 cents a share.

Revenue more than doubled from last year to $139.5 million. Analysts were anticipating $128 million in revenue.

LinkedIn also raised its full-year outlook after it posted the 126% increase in third-quarter revenue, an important metric that showed the company was building on its momentum since its IPO.

The company gets about two-thirds of its revenue from fees it charges for premium access to profiles and other data, and the rest from advertising.

LinkedIn maintained its pace of adding about two new members a second, finishing the quarter with 131.2 million members.

This is an especially important quarter for LinkedIn because employees and other insiders can begin selling their shares starting Nov. 21. Investors may be nervous that the end of the lockup will usher in a tidal wave of sales that could cause the stock to drop.

LinkedIn made its hotly anticipated public trading debut before the economic turbulence that has delayed the IPOs of other Silicon Valley companies such as social gaming company Zynga.

As such, it's a bellwether for the social networking sector. Groupon, the daily deals company, was scheduled to set the price for one of the year's most closely watched IPOs late Thursday.

LinkedIn continues to trade at about twice the $45 price it fetched in its initial offering. It was the largest Internet IPO since Google's in 2004. Some investors worry that its valuation is too high with LinkedIn trading at 12 times projected sales over the next year.

LinkedIn said Thursday that it has filed with the Securities and Exchange Commission to sell more stock. The company said it planned to use the proceeds for "working capital and general corporate purposes."

jessica.guynn@latimes.com

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