LinkedIn Gets Linked Up With Brokerage Firms, Goes IPO

LinkedIn has filed for an initial public offering (IPO). This could be the start of something big. In the social networking arena, there are a couple companies waiting in the wings.

The rumors surrounding Facebook going public have ebbed and flowed. Pending lawsuits may only slightly detract from Facebook’s desirability. LinkedIn doesn’t have such a murky past.

While Facebook is aimed at ‘Everyman’, LinkedIn has a more selective following focused on professionals. The more business oriented site has registered upwards of 90 million users.

Its revenue is quoted in the listing documents as $161 million, with a net income of $1.85 million for January through September, 2010. The similar timeframe in 2009 was not as profitable; in fact the company posted a loss of $3.4 million. Kicked off by their 2010 returns, LinkedIn is hoping for an ongoing success.

It draws revenue from three avenues, including the most common sources for web-based businesses, advertising and subscriptions. LinkedIn goes one step further offering hiring solutions for human resource managers perusing its data base. This access path has garnered 41 percent of the amount quoted for the three quarters of 2010. The site invites users to "discover inside connections when you’re looking for a job or new business opportunity."

Samples of job openings posted on LinkedIn come from across the US and Canada: KLA-Tenkor, Milpitas California, is looking for a software engineer with C++; Comsys in Atlanta, Georgia wants a portal business analyst; the University of Maryland in Washington DC could use a freelance graphic designer; and MetaSoft in Toronto, Canada needs a sales manager, while Fujitsu-USA wants to hire a senior ERP project manager.

This week, LinkedIn launch InMaps a new tool that maps the people you know, color coded by associations.

The human resources aspect of LinkedIn definitely gives it an edge over similar socially-focused sites. Its members range over 200 countries and territories. For example, 20 million members reside in Europe, eight million in India and one million in Brazil. This IPO may not be as attractive to investors as the much awaited Facebook move into the publicly traded ring. Facebook reported revenue defined by a ‘B’ as in $1.2 billion in the same time frame where LinkedIn was pulling in revenue defined by ‘M’ as in millions.

Another sticking point is the company’s admission that "a substantial majority" of its members aren’t regular visitors to the website. That could be based on the fact that professionals generally have more important things to post or review than what someone had for lunch. LinkedIn’ers visit their site less than monthly. That means the advertisers aren’t exposed to the users as often as they might be on other sites.

LinkedIn was founded by five individuals on May 5, 2003, a date referred to by company employees as Cinco de LinkedIn, a reference to the celebrated holiday of Cinco de Mayo.

Jeff Weiner, seen on the right, is its current CEO having been with the company since 2008. The company’s list of investors lists Goldman Sachs who recently was associated with Facebook privately held stock. 

Sequoia Capital appears on the list and is also a venture investor in Yahoo!, Google, and PayPal, as well as being an early investor in Cisco, Apple and Oracle. After close to a decade of operation, LinkedIn is offering Class A Common Stock in its IPO. However, the registration statement must become effective before these securities can be sold or offers to buy can be accepted, so don’t call your stock broker just yet.