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LinkedIn's 4Q eclipsed by disappointing outlook

8:22 PM, Feb 6, 2014   |    comments
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SAN FRANCISCO (AP) -- LinkedIn finished last year with a strong showing, but the online professional networking service rattled already jittery investors by indicating its performance will weaken this year as management ramps up spending while revenue growth slows.

The projection released Thursday with LinkedIn's fourth-quarter results triggered an 8 percent drop in the company's stock price during extended trading. The shares shed $17.91 to $206.54.

LinkedIn Corp. also announced it is spending $120 million to buy Bright, a startup that makes data-analysis tools matching job hunters with employers.

The acquisition could foreshadow a year of heavy investment that crimps LinkedIn's earnings. CEO Jeff Weiner emphasized the Mountain View, Calif., company will be spending "significantly" on data centers and long-term projects that may take several years to pay off.

The late sell-off in LinkedIn's stock came a day after another online networking service, Twitter Inc., disappointed Wall Street with a fourth-quarter report that revealed a jarring slowdown in its user growth. Twitter only added 9 million users during the period, well below its quarterly average of 16 million additional users during the previous year.

In contrast, LinkedIn is persuading more people to set up accounts and share their job histories at a steady pace that suggests more people are interested in managing their careers than sending short messages on Twitter.

Another 18 million LinkedIn accounts were set up in the fourth quarter, extending the service's reach to 277 million users through December. That matched the average of additional accounts that LinkedIn gained in the previous four quarters. Twitter ended December with 241 million users.

But LinkedIn appears to be having problems establishing its service as an alluring destination that keeps people coming back. Both the number of visitors to LinkedIn's site and the number of total pages viewed declined during the final three months of last year, marking the second consecutive quarter of decay.

That's a troubling trend because it means fewer opportunities for online advertising, which currently accounts for about one-fourth of the LinkedIn's revenue. The company makes most of its money from subscriptions and other fees paid by employers and headhunters.

LinkedIn earned $3.8 million, or 3 cents per share. That was down 67 percent from $11.5 million, or 10 cents per share, a year earlier.

If not for certain expenses, LinkedIn said it would have earned 39 cents per share - a penny above the projections of analysts surveyed by FactSet.

Revenue climbed 47 percent from the previous year to $447 million. Analysts had anticipated revenue of $438 million.

Management predicted revenue of $455 million to $460 million during the first three months of this year, below the average analyst estimate of $471 million.

(Copyright 2014 by The Associated Press. All Rights Reserved.)

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