Earnings Preview: LinkedIn to post 2Q results

AP News
Posted: Jul 31, 2012 11:27 AM

NEW YORK (AP) — LinkedIn is expected to quadruple its second-quarter earnings when it posts results Thursday, which would be a respite from a string of underachieving numbers from some banner names in social media sector.

WHAT TO WATCH FOR: As more people set up their professional profiles on LinkedIn, employers and job seekers alike are using it as a digital rolodex. That creates more moneymaking opportunities for LinkedIn because the company brings in most of its revenue from the fees that it charges companies, recruiting services and other people to gain additional access to the website's members.

Susquehanna analyst Herman Leung expects LinkedIn to discuss a security breach in which users passwords were stolen and millions appeared to be leaked online in June. LinkedIn did not say how many of the more than six million passwords that were distributed online corresponded to its users' accounts. The dating website eHarmony was also compromised.

Leung will also be looking for an update on new offices LinkedIn is building in Japan, Brazil, Singapore, India and South Korea as it looks to build up its international business.

"An update on the sales force build out and update on new product launches will likely also be discussed," he added.

WHY IT MATTERS: LinkedIn was the first of the current crop of social networking and Internet companies to go public more than a year ago. Since then, Facebook Inc.'s IPO flopped and Zynga Inc., the online game maker, is having a lot of trouble convincing investors that it business is worth investing in, with its stock down nearly 70 percent from its $10 IPO price.

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LinkedIn, so far, has been an exception. Its stock has more than doubled since going public. Its revenue has seen steady growth, though it posted a loss in the third quarter of last year because of increasing investments in its business.

WHAT'S EXPECTED: Analysts, on average, are expecting earnings of 16 cents per share on revenue of $215.2 million, according to a poll by FactSet.

LAST YEAR'S QUARTER: LinkedIn Corp. earned $4.5 million, or 4 cents per share, in the April-June period of 2011. Revenue more than doubled to $121 million.