LinkedIn, the online resume and networking service, confirmedThursday that it plans an initial public offering, in what could bethe first in a wave of stock sales by a new generation of Internetgiants.
The Mountain View company, with an estimated value of more than$2.5 billion, is one of several startups, along with Facebook andTwitter, that have based their tremendous growth on the popularityof social networking and the promise of lucrative, targetedadvertising.
As with those other sites, LinkedIn's plans for an initial publicoffering have been the subject of wide speculation. But withFacebook not expected to go public before 2012, experts say asuccessful LinkedIn offering would be a positive sign for SiliconValley as a whole, and especially for other social networkingstartups and the venture capitalists who back them.
"LinkedIn is probably one of a handful of companies that reallyhave the stature to do something meaningful in advance of Facebook,"said Ted Hollifield, a Palo Alto-based partner with the Dorsey &Whitney law firm who works with startups and venture firms.
The rate of tech IPOs has slowed dramatically in recent years,with only about a dozen occurring in Silicon Valley since lastsummer's high-profile offering by electric-car maker Tesla Motors.Now, however, "the floodgates are open" for social media companies,said Wedbush Securities analyst Lou Kerner, who cited the LinkedInannouncement and Wednesday's offering by Demand Media, a SantaMonica company that produces content for online sites.
LinkedIn did not announce a date for its initial offering. Thecompany also said the number of shares and price range have not beendecided. And there's always a chance its IPO does not get off theground.
The company's value was estimated Thursday at more than $2.5billion by SharesPost, an online exchange for stock in privatefirms. The initial offering could be for less than the company'stotal value, however, if early investors or insiders like co-founder and Chairman Reid Hoffman choose not to sell their shares.
In addition to Hoffman and his wife, who together own 21 percentof the company, the three biggest shareholders are the venture firmsSequoia Capital, Greylock Partners and Bessemer Venture Partners.
LinkedIn is a Web platform that lets users post their resumes,search for others in various professions and exchange messages orother information. The basic service is free, but users pay forpremium features.
The company, which claims more than 90 million users around theworld, also sells software tools to help employers and recruitersuse the site to search for job candidates. These productscontributed nearly half the company's revenue in the most recentquarter for which it provided figures.
It also sells advertising: Just this week, it announced new toolsto help marketers target LinkedIn users by their job title, companyname, seniority or other criteria.
Among those posting resumes on the site are executives at everycompany in the Fortune 500, according to LinkedIn's promotionalmaterials, which tout its "affluent and influential membership" as a"valuable demographic" for advertisers.
In a prospectus filed Thursday, the company said it had $120million in revenue in 2009 and $160 million in the first nine monthsof 2010. It also reported $1.8 million in net income in the firstthree quarters of 2010.
The company warned that its rate of revenue growth is likely toslow, however, and said it does not expect to show a profit in 2011because it is continuing to spend on expansion.
But Kerner, noting the pop in Demand Media's stock on its firstday of trading, predicted that LinkedIn's offering will besuccessful. "It's going to be a home run," he said.
Mercury News staff writers Mike Swift and Chris O'Briencontributed to this report. Contact Brandon Bailey at 408-920-5022.Follow him at Twitter.com/BrandonBailey.Linkedin-- Company startedin the living room of co-founder Reid Hoffman in 2002.-- Currentlyhas more than 90 million members around the world, with more thanhalf outside the United States.-- Started the year with 1,000employees, up from 500 at the start of 2010.-- Reported $160 millionin
revenue for the first nine months of 2010.-- Recently announcedthat professional workers are more likely to get promoted in Januarythan any other month, according to a statistical analysis of userdata.
Source: LinkedIn
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