LinkedIn forecasts weak first-quarter profit, shares plunge
By Sai Sachin R
(Reuters) - LinkedIn Corp forecast first-quarter profit and revenue below analysts' estimates as it faces headwinds in its online ads and recruitment services businesses in markets outside North America, sending its shares down 27 percent in extended trading.
The operator of the world's biggest networking site for professionals also said on Thursday that it would phase out an online ad product in the first half of 2016, which would hurt its revenue by at least $50 million this year.
LinkedIn developed the product, Lead Accelerator, from technology it acquired with the purchase of marketing company Bizo in 2014 for $175 million.
"While initial demand was solid, the product required more resources than anticipated to scale," Chief Financial Officer Steve Sordello said in a statement.
The company's Talent Solutions unit, which connects recruiters and job seekers, is also facing pressure in Europe, the Middle East, Africa and Asia-Pacific due to "current global economic conditions," Sordello said.
LinkedIn's revenue from ads on its website rose 20 percent in the fourth quarter, but the growth was the slowest in two years. The business, which accounted for a fifth of the company's total revenue, had grown at 56 percent in the year-earlier quarter.
LinkedIn forecast an adjusted profit of about 55 cents per share for the first quarter, way below the average analyst estimate of 74 cents, according to Thomson Reuters I/B/E/S.
Its revenue forecast of about $820 million also missed analysts' expectations of $866.9 million by a wide margin.
LinkedIn reported a net loss of $8.4 million, or 6 cents per share, attributable to the company for the quarter ended Dec. 31 as expenses surged 30 percent.
The company, which had a profit in the year-earlier quarter, has been spending heavily on expansion by buying up companies, hiring sales personnel and increasing its presence in China and other markets.
Excluding items, LinkedIn earned 94 cents per share, higher than the average analyst estimate of 74 cents.
Revenue jumped about 34 percent to $861.9 million.
LinkedIn shares were trading at $140.20 after the bell.
(Reporting by Sai Sachin R in Bengaluru; Additional reporting by Natalie Grover; Editing by Kirti Pandey)
