LinkedIn shares drop af­ter sales out­look trails es­ti­mates

The Pak Banker - - BUSINESS -

LinkedIn Corp. shares lost al­most a third of their value af­ter the pro­fes­sional net­work­ing site fore­cast a year of slower rev­enue growth amid signs of weak­ness in sales of ad­ver­tis­ing and mar­ket­ing tools.

Rev­enue will be about $820 mil­lion in the first quar­ter, and $3.6 bil­lion to $3.65 bil­lion for 2016, the com­pany said in a state­ment Thurs­day. That missed an­a­lysts' av­er­age es­ti­mate for $867.1 mil­lion and $3.9 bil­lion, ac­cord­ing to data com­piled by Bloomberg. LinkedIn had 414 mil­lion users in the fourth quar­ter, up from 396 mil­lion in the prior pe­riod.

"In this mar­ket, there's no mercy for a miss," said James Cak­mak, an an­a­lyst at Mon­ness Crespi Hardt & Co. "While the fourth-quar­ter re­sults were solid, the out­look fell short as global macro and el­e­vated in­vest­ments pose head­winds for 2016."

While Chief Ex­ec­u­tive Of­fi­cer Jeff Weiner has made in­vest­ments to di­ver­sify the busi­ness, like ac­quir­ing education web­site Lynda.com for $1.5 bil­lion last year, it will be a while be­fore those ef­forts con­trib­ute mean­ing­fully to rev­enue. In the mean­time, LinkedIn is fac­ing a slow­down in its mar­ket­ing-ser­vices busi­ness, which com­pa­nies use to find po­ten­tial cus­tomers, show them ads and rel­e­vant in­for­ma­tion and gen­er­ate sales leads. Sales to re­cruiters, who use LinkedIn to find can­di­dates for jobs, are also slow­ing.

The shares of Moun­tain View, Cal­i­for­nia-based LinkedIn fell as much as 30 per­cent in ex­tended trad­ing. The stock ad­vanced less than 1 per­cent to $192.28 at the close in New York, leav­ing them down 15 per­cent this year. The shares de­clined 2 per­cent in 2015. If LinkedIn's shares stay near post-earn­ing lows, it could cost co-founder Reid Hoff­man more than $750 mil­lion, low­er­ing his net worth to about $3 bil­lion, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex.

LinkedIn has a ten­dency to give guid­ance that misses ex­pec­ta­tions, only to beat it later, said Colin Gil­lis, an an­a­lyst at BGC Part­ners.

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