LinkedIn Sandbags Estimates, Shares Tumble


NEW YORK (TheStreet) - LinkedIn (LNKD), the hugely popular career website, took a page out of the Apple (AAPL) playbook: guide really low, anger some analysts and then surprise big on the upside.

LinkedIn was falling as much as 11% in after-hours trading on thursday as the company forecast second-quarter sales and earnings that fell short of analyst estimates. LinkedIn, which reached a record-high of $201.67 at the close of trading was dropping 16 points, or 8.2%, to $185.66.

The Mountain View, Calif-based Internet company said it expects to post earnings before interest, depreciation and amortization of sales of $77 million to $79 million, short of the $84.8 million average forecast of 25 analysts surveyed by Bloomberg. Sales were also less than expected, as the company's forecast revenue for the current quarter between $342 million and $347 million, short of an average estimate of $359.7 million.

"They guide to this number and then act like we're all supposed to be complicit and do what they tell us," Michael Pachter, Los Angeles-based analyst at Wedbush Securites said in a phone interview. "Most analysts are more concerned with currying the favor of management than they are about being right."

Pachter forecast adjusted earnings of 41 cents a share for the first quarter compared to the average estimate of 31 cents per share. LinkedIn posted 45 cents on an adjusted basis. Pachter rates LinkedIn shares the equivalent of "hold."

For the first quarter, LinkedIn sales rose 72% to $324.7 million, beating an average forecast of $318.2 million as adjusted net income reached $52.4 million, also topping analyst's average forecasts of $36.5 million.

Whether LinkedIn shares can trade higher than Thursday's closing prices had been a matter of some debate. Of 29 analysts covering the company, 14 rate the company a "buy" while 15 have a "hold," according to Bloomberg.

Written by Leon Lazaroff in New York