LinkedIn shares tumble on weak forecast for 2016

SAN FRANCISCO -- LinkedIn shares plunged as much as than 28 per cent in after-hours trading Thursday after it reported better-than-expected results for the fourth quarter but provided a weak forecast for 2016.

See Full Article

The professional networking service's adjusted earnings and revenue beat Wall Street's estimates for the last three months of 2015, thanks to strong demand for its hiring and recruiting software. But it issued a forecast that was far below what analysts were expecting.

Among other things, LinkedIn said it will phase out a new advertising service that hasn't worked out as planned, which will cause it to forego roughly $50 million in near-term revenue.

Mountain View, California-based LinkedIn Corp. reported a loss of $8.4 million, compared with a $3 million profit a year earlier. That amounted to a loss of 6 cents a share in the latest quarter, but the company said it earned 94 cents a share after adjusting for stock compensation and other one-time items. Analysts surveyed by FactSet were expecting adjusted earnings of 78 cents a share on revenue of $857 million.

Fourth-quarter revenue rose 34 per cent to $862 million.

Despite the strong finish, the company disappointed investors by forecasting adjusted earnings for the current period will be 55 cents a share on revenue of roughly $820 million. Analysts were expecting first-quarter adjusted earnings of 75 cents a share on sales of $868 million.

The company's forecast for the full year was also lower than expected. LinkedIn said growth in its all-important "Talent Solutions" segment, which provides software tools for employers and recruiters, will slow from 30 per cent last year to mid-20 per cent in 2016. It blamed an economic downturn in Europe and Asia.

The online company also said a new advertising program called "Lead Accelerator" would be discontinued because it "required more resources than anticipated."

LinkedIn is often described as a social-networking service like Facebook or Twitter, which make money primarily from digital ads. But LinkedIn has a different business model: It gets nearly two-thirds of its revenue from fees that employers and recruiters pay to use its platform, while advertising and premium subscriptions contribute the rest.

The company has seen steady revenue growth over the last five years, but it often reports a net loss because of big stock grants that it awards to employees.

Shares of LinkedIn have been on a roller-coaster over the last year. The stock plunged last spring when the company lowered its revenue forecast and warned of short-term costs associated with its $1.5 billion purchase of online education company Lynda.com. Shares surged again in the fall, but dropped more than 20 per cent again in the last three months.

LinkedIn has said it expects to continue growing as it expands in China and other markets. It's also counting on more revenue from online training courses and software that commercial sales representatives can use to drum up business from their LinkedIn contacts.

But analysts warn LinkedIn could face more competition from companies like GlassDoor, which shows job postings and workers' ratings of companies, or Facebook, which recently launched a service for workers to communicate with their colleagues.



Advertisements

Latest Economic News

  • Surveys asking if men are superior, whether gays deserve equal rights spark a research rethink

    Economic CBC News
    How would you react if you agreed to do an online survey about the environment in exchange for Air Miles and were asked to agree or disagree with the following statements?Society has gone too far in granting gays and lesbians equal rights. Source
  • Fix tax rate or risk business exodus, trade association warns

    Economic CBC News
    Another of Canada's largest business groups is warning that Ottawa needs to act now to lower corporate taxes or risk a continued exodus of investment and jobs to the United States. The Canadian Manufacturers and Exporters, which represents 2,500 companies, released a report this week that paints a bleak picture of the business landscape in this country: declining investment in new equipment and technology, a sharp drop in foreign investment in Canada. Source
  • Asian stocks rise despite tariff tension

    Economic CTV News
    OKYO - Asian stock markets mostly rose Thursday as concern fades over the trade tensions between the U.S. and China. Uncertainty remains, but the original tariff threats made earlier in the week were not followed by material action. Source
  • Judge awards Dow Chemical US$1B in damages against Nova Chemicals

    Economic CTV News
    EDMONTON -- A judge has awarded Dow Chemical Canada $1.06 billion in damages against Nova Chemicals Corporation in a dispute over a massive ethylene plant in central Alberta. The dispute centred around the operation of a production facility in Joffre known as E3. Source
  • Tim Hortons spending $100M to revamp distribution, open new warehouses

    Economic CTV News
    TORONTO -- Tim Hortons will spend $100 million to revamp its distribution system and open two new Canadian warehouses, months after some franchisees were angered when supply deliveries from the company were delayed because of software upgrades. Source
  • N.S. hopes to expand offshore oil, environmentalists criticize move

    Economic CTV News
    HALIFAX -- Nova Scotia has committed millions of dollars to encourage offshore exploration, hoping to bring billions more in oil riches -- even as ecologists say the cash would be better used to counter carbon emissions. Source
  • Nexen Energy announces $400M expansion of its oilsands project in Alberta

    Economic CTV News
    CALGARY -- Nexen Energy says it will spend about $400 million to build a 26,000-barrel-per-day expansion of its Long Lake oilsands project in northern Alberta. The company, which was purchased by Chinese state-owned China National Offshore Oil Co. Source
  • Swoop Airlines: What you need to know about Canada's new low-cost carrier

    Economic CTV News
    Just before sunrise, Canada’s newest ultra-low cost airline saw its first flight take to the skies. Swoop, a no-frills airline launched by WestJet, carried an inaugural group of travellers on Wednesday morning from Hamilton, Ont. Source
  • Burger King sorry for ad encouraging women to get impregnated by World Cup players

    Economic CTV News
    MOSCOW -- Burger King has apologized for offering a lifetime supply of Whoppers to Russian women who get pregnant by World Cup players. Critics assailed the offer, announced on Russian social media, as sexist and demeaning. Source
  • S&P/TSX composite index hits record closing high

    Economic CBC News
    Canada's main stock index closed at a record high Wednesday, boosted by a broad-based rally led by health care, energy, and consumer staples stocks. The S&P/TSX composite index closed up 104.42 points at 16,420.95, topping its previous record of 16,412.94 set Jan. Source