LinkedIn Plunges as Second-Quarter Forecast Misses Estimates

LinkedIn, Twitter and the Collapse of High-Flying Stocks

LinkedIn Corp.’s shares dropped the most since their 2011 market debut after the company delivered quarterly revenue that missed analysts’ estimates for the first time, shaking confidence in a historically stable business plan.

The professional-networking website also forecast sales that missed projections for the second quarter and cut its guidance for annual revenue, citing the strong U.S. dollar and slower-than-predicted growth.

“This is an extraordinary miss for a company that has by and large avoided any major blowups since going public,” said Paul Sweeney, an analyst at Bloomberg Intelligence.

Since its debut as a public company in 2011, LinkedIn has steadily surpassed estimates for sales until now. The company, with its mix of job-related tools for consumers and businesses, has been expanding its offerings every year under Chief Executive Officer Jeff Weiner, through acquisitions and rapid hiring. Those efforts aren’t translating to as much revenue growth as expected, Sweeney said.

Second-quarter revenue will be $670 million to $675 million, the company said Thursday. Analysts had predicted $718.3 million, on average, according to data compiled by Bloomberg. LinkedIn also trimmed its forecast for annual revenue to $2.9 billion, from $2.93 billion to $2.95 billion.

The company’s shares fell 19 percent to close at $205.21 on Friday, marking the biggest decline since the company’s initial public offering in May 2011.

Stronger Dollar

First-quarter revenue decelerated in LinkedIn’s main business of serving recruiters, the company said. Assigning accounts to new sales representatives at the beginning of the year caused some customer loss, and it will take a while to repair relationships with those clients, LinkedIn said. The company also fell short of its targets for selling display advertising.

Growth was also hurt by currency-exchange rates, as LinkedIn generated 39 percent of its revenue from outside the U.S. The Bloomberg Dollar Spot Index, a measure of the U.S. currency against 10 major peers, gained 6.2 percent in the first quarter.

Total first-quarter sales rose 35 percent to $637.7 million. Analysts had projected $637.8 million.

Revenue from marketing products rose 38 percent from a year earlier to $119 million. Sales from services that companies use to recruit increased 36 percent to $396 million. LinkedIn, based in Mountain View, California, continues to expand its services, moving into professional education with an agreement this month to acquire Lynda.com Inc. for $1.5 billion.

Profit excluding some items was $73 million, or 57 cents a share, matching analysts predictions. LinkedIn’s net loss widened to $42.5 million, or 34 cents a share, from $13.4 million, or 11 cents.

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