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LinkedIn shares plunge after first-quarter earnings release

The professional networking service reports revenue and profit that surpass forecasts, but its outlook for the rest of the year disappoints investors.

May 03, 2013|By Jessica Guynn, Los Angeles Times
  • A LinkedIn sign is displayed on the professional networking service's headquarters in Mountain View, Calif.
A LinkedIn sign is displayed on the professional networking service's… (David Paul Morris / Bloomberg )

SAN FRANCISCO — LinkedIn Corp. has consistently beat Wall Street expectations since its initial public stock offering two years ago.

The professional networking service did it again Thursday, reporting first-quarter revenue and net income that surpassed forecasts.

But its outlook for the rest of the year fell below analyst expectations, disappointing investors and causing the stock to plunge in extended trading. The company also showed signs of slowing growth.

LinkedIn shares, which closed up $6.85, or 3.5%, at $201.67, fell 10% to $181.30 in after-hours trading after the Mountain View, Calif., company released its first-quarter results.

It was a painful tumble for the high-flying stock, which had closed above $200 for the first time Thursday.

Ever since it went public in May 2011 at $45 a share, LinkedIn has defied expectations by making itself the No. 1 spot for employers to hunt for talent and for workers to seek jobs or get career advice.

In a conference call with analysts, Chief Executive Jeff Weiner said LinkedIn, which now has 3,700 employees and more than 225 million members, saw its momentum continue in the first quarter.

The company earned $22.6 million, or 20 cents a share, in the first quarter, up from $5 million, or 4 cents, in the same period last year. Revenue jumped 72% to nearly $325 million. Analysts had expected revenue of nearly $318 million.

But LinkedIn fell short of the targets Wall Street set for the rest of 2013. For the second quarter, LinkedIn forecast total revenue of $342 million to $347 million, below analyst estimates of $360 million.

For the full year LinkedIn expects revenue between $1.43 billion and $1.46 billion, an increase of $20 million over its last forecast, but below analysts' forecast of $1.5 billion.

Cantor Fitzgerald analyst Youssef Squali said in a research note that the outlook was not surprising considering "management's conservative stance." Nevertheless, investors are worried about taking too much of a risk on LinkedIn, whose growth rate has begun to slow even as its shares jumped about 76% this year.

"Good business, conservative management, and crazy multiple," Wedbush Securities analyst Michael Pachter said.

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