LinkedIn IPO could start industry trend
SAN FRANCISCO — LinkedIn Corp.'s plan to raise as much as $175 million in an initial public offering may be the first in a wave of share sales for U.S. social-networking companies.
The largest professional-networking site plans an IPO after turning a profit in the first nine months of last year and more than tripling revenue between 2007 and 2009, it said in a filing Thursday with the Securities and Exchange Commission.
Other companies that foster online interaction may follow suit. LinkedIn is at the forefront of social-Web startups that aim to replicate the successes of Internet pioneers, such as Google and Amazon.com, and avoid the fate of sites like Pets.com, which shut less than a year after its IPO.
"LinkedIn is bringing the very hot concept of social networking to the practical business world," said Dixon Doll, co-founder of venture-capital firm DCM, based in Menlo Park, Calif. "The whole social-networking phenomenon may be in the fourth or fifth inning and none of these have gotten public yet."
Social deals site Groupon, which rebuffed a $6 billion takeover approach from Google, is in talks with banks about a public offering this year, while Facebook may pursue an IPO in 2012, three people familiar with the matter said last year.
For the nine months that ended in September, net income attributable to common shareholders was $1.85 million, LinkedIn said. Revenue was $161.4 million, almost double the $80.8 million a year earlier. Total revenue in 2009 was $120.1 million, and the company had $89.6 million in cash and equivalents as of Sept. 30.
LinkedIn could draw strong demand in the public markets because it has steadily boosted sales from advertising, subscriptions and hiring services, said Tom Taulli, an independent technology analyst based in Los Angeles.
"There's a lot to like if you're an investor," said Taulli. LinkedIn is "growing quickly, it has multiple revenue streams and there's global potential here."