LinkedIn Shares Drop as Forecast Disappoints--2nd Update

By Deepa Seetharaman

LinkedIn Corp. swung to a fourth-quarter loss, hurt by increased spending to develop products, and the company gave a soft forecast for both its top and bottom lines in 2016.

Shares of the company dropped 28% to $138.99 after hours. As of Thursday's close, the stock had already declined 24% in the past three months.

The professional online network posted a loss of $8.4 million, or 6 cents a share, for the last three months of 2015. A year earlier, the company eked out a profit of $3 million, or 2 cents a share.

For 2016, LinkedIn said it expects adjusted profit to range from $3.05 to $3.20 a share on revenue of $3.6 billion to $3.65 billion. Wall Street had expected adjusted earnings of $3.67 and revenue of $3.91 billion.

For the first quarter, the company forecast earnings of 55 cents and revenue of $820 million, compared with analysts' projections of 74 cents and $867 million.

The Mountain View, Calif., company said revenue rose 34% to $861.9 million during the fourth quarter. Analysts had projected fourth-quarter revenue of $857.6 million.

Excluding certain expenses, LinkedIn said it would have earned 94 cents a share, according to Thomson Reuters. In late October, LinkedIn projected fourth-quarter earnings of 74 cents per share.

LinkedIn hit 414 million members in the fourth quarter.

Product-development spending jumped to $217.3 million from $150.3 million in the year-earlier quarter.

LinkedIn ramped up hiring and poured more dollars into research and development last year. In May, it bought Lynda.com, an online-learning company, in a cash-and-stock deal worth $1.5 billion.

In December, LinkedIn unveiled a cleaner, faster version of its mobile app. The redesigned app should drive more user engagement, ultimately attracting more advertisers and paying subscribers, analysts said.

The company also expanded and reorganized its sales force in 2015. In the first quarter, about 60% of its customers got a new account representative. During the first nine months of 2015, LinkedIn's sales and marketing teams added just over 1,300 new people around the world, boosting head count by 50%.

Users spent an average of 20 minutes a month on LinkedIn in the fourth quarter, according to RBC Capital Markets. That was up 3% year over year, breaking five straight quarters of declines. The number still pales in comparison to the amount of time users spend on Facebook, Instagram or Snapchat.

LinkedIn draws around 60% of its revenue from its largest division, Talent Solutions, which helps recruiters search for candidates. Most the unit's revenue comes from corporate clients.

LinkedIn's other divisions are Marketing Solutions, focused on advertising, and Premium Subscriptions, which each account for about one-fifth of the company's revenue.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

February 04, 2016 17:21 ET (22:21 GMT)

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