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Technology Stocks : LinkedIn Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Brasco One who wrote (116)	11/16/2011 2:41:55 AM
From: Glenn Petersen	Respond to of 272

I have made money trading both sides. I like the company and think that they perform a useful function. I also think that they will be sucessful in the long term. I just feel that the current valuation is too high. I am short now, but with tight stops. I respect the low float. LinkedIn Seeks To Bolster Shares By SHAYNDI RAICE Wall Street Journal November 16, 2011 LinkedIn Corp., a poster child for this year's spate of Web-company initial public offerings, is taking steps to try to keep the price of its newly public shares from taking a nose dive next week. The Mountain View, Calif., Internet company has been preparing for a flood of its shares to enter the market on Monday. That's the day the professional networking site will hit the end of its lock-up period, the 180-day term after an IPO during which insiders such as employees and early investors are forbidden from selling the company's stock. LinkedIn could see as many as 24 million shares released to the stock market when its lock-up expires, with the increased supply of shares potentially diluting its stock price. So this week, LinkedIn said in a regulatory filing that it would have a $500 million secondary offering. In an effort to control the number of shares on the market—and who ends up getting their hands on them—the company said that while it is selling eight million additional shares through the offering, anyone who sells now has to agree to another 90-day lock-up period. The move is designed to temper the overall effect of the lock-up's expiry. LinkedIn said in its filing on Monday that the stock sale—which is an expansion of an offering that it disclosed earlier this month—is intended to ensure "an orderly distribution of shares." With a secondary offering, which is marketed typically to institutional investors, a company can handpick big investors who are generally long-term and stable holders of stock. But others said LinkedIn's move to try to control its share price would amount to naught. Ken Sena, an Evercore analyst, said he still has concerns about the 24 million new shares that will go onto the market. "What happens when you increase supply—then you're talking about a lower [stock] price," he said. Like Groupon Inc., Zillow Inc. and other hot Web companies that have gone public this year, LinkedIn offered only a small percentage of its overall shares to investors when it went public in May. The strategy—known as a "small float" strategy—coupled outsized investor demand with a tiny supply of shares to keep a stock price high. So far, it's worked: LinkedIn's stock has been trading well above its IPO price of $45 a share over the past six months. Yet LinkedIn has faced criticism for what some Wall Street analysts say is an "expensive" stock price as it remains unprofitable and is spending heavily to grow. Earlier this month, the company reported a loss for the third quarter, while its revenue more than doubled. The new share offering of at least eight million shares would nearly double LinkedIn's float of nine million shares, the number of shares outstanding that are available for trading. There will be 97 million shares outstanding after the offering. But under the terms of the offering, top LinkedIn executives—including chief executive Jeff Weiner and chief financial officer Steve Sordello—can sell 10% of their current holdings on the condition that they agree to yet another 90-day lock-up period, according to the company's regulatory filing. LinkedIn chairman and founder Reid Hoffman also agreed to an additional 90-day lock-up period but isn't selling any of his current shares, according to the regulatory filing. Venture-capital firm Sequoia Capital, one of LinkedIn's early investors, agreed to similar terms. Other early investors are taking the opportunity to cash out. Bain Capital, an early investor in the Web company, is selling all of its 3.7 million class B shares, or 4.3% of those outstanding, according to the regulatory filing. Other sellers include a venture-capital fund affiliated with SAP AG, which plans to offer 145,300 class B shares. LinkedIn executives are currently on a road show to pitch the secondary offering to institutional investors, said people familiar with the matter. The road show will last for one or two more days before the company decides on a final price, which will most likely be at a discount to the current stock price, said one of the people. LinkedIn's shares closed at $74.86, down 4.6%, or $3.63, in 4 p.m. composite trading on the New York Stock Exchange. Lise Buyer, a Silicon Valley-based IPO consultant, said doing a secondary offering prior to a lock-up's expiration isn't uncommon. Knowledge of a large overhang in a stock can often serve to attract short sellers and keep enthusiasm from large institutions muted, she said. "An organized effort to clear the overhang makes particular sense in the context of a stock with a small float," she said. —Matt Jarzemsky contributed to this article. Write to* Shayndi Raice at* shayndi.raice@wsj.com online.wsj.com