Earnings Preview: LinkedIn to post 1Q Wednesday

LinkedIn's 1st-quarter earnings report to put streak of pleasant surprises on the line

Associated Press

SAN FRANCISCO (AP) -- LinkedIn Corp.'s sterling reputation on Wall Street will be on the line Thursday when the online professional networking service reports its first-quarter earnings.

WHAT TO WATCH FOR: To make a good impression, LinkedIn will likely have to deliver results well above the analyst projections that steer investor expectations. The company has set a high bar for itself by topping analyst forecasts in all seven of its previous quarters as a publicly traded company.

The uninterrupted streak of pleasant surprises has helped to more than quadruple LinkedIn's stock from its initial public offering price of $45 nearly two years ago. If the company's first-quarter performance impresses, LinkedIn's stock could shoot past $200 for the first time. The shares hit a new peak of $195.50 Wednesday before retreating slightly.

LinkedIn has thrived by establishing itself as the go-to place for employers to find talented workers and for people to get job tips and other advice to manage their careers. It doesn't cost anything for people to set up a personal profile anchored by their resume.

The formula has turned LinkedIn's website into a digital rolodex that held the professional backgrounds of 202 million members at the end of last year. LinkedIn has been adding an average of 14 million members per quarter since its IPO, a pace that should translate into 216 million members through March.

The company, which is based in Mountain View, Calif., makes most of its money by charging employers and headhunters for analytical tools and additional access to its website. Less than 30 percent of LinkedIn's revenue comes from online advertising, something management is trying to change by adding more features designed to get members to check into the website more frequently and to stay for longer periods.

Toward that end, LinkedIn recently revamped its applications for Apple's iPhone and smartphones running on Android software to make it easier for users to find content likely to appeal to their professional interest. The company also just struck a $90 million deal to buy Pulse, a service that distributes digital content.

WHY IT MATTERS: LinkedIn is playing an increasingly important role in the economy as it changes the way that people find jobs and the way that employers fill them.

WHAT'S EXPECTED: Analysts are forecasting earnings of 30 cents per share on revenue of $318 million, according to FactSet. The earnings forecast doesn't include the company's expenses for employee stock compensation.

LAST YEAR'S QUARTER: The company earned $5 million, or 4 cents per share, on revenue of $188 million. Its profit would have worked out to 15 cents per share if not for the costs of employee stock compensation and charges unrelated to its ongoing business

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