Linkedin shares down 10% after lacklustre revenue forecast

Linkedin Corp shares were down 10 per cent yesterday following disappointing revenue forecasts that indicated, advertising growth would not scale up to expectations after the company came out with a revamped mobile app and other new products designed to keep smartphone users engaged.

The professional social network specialising in recruiting services had over the past months introduced a series of enhancements such as news content for mobile devices, to keep users signed in longer and sell more advertising.

However, yesterday executives warned of only a moderate growth in advertising, than in its other services. Its fledgling, mobile-oriented "newsfeed" ads - or promotions that appeared directly in a users' stream of content continued to be under testing and would be only gradually introduced.

According to Linkedin finance chief Steve Sordello who spoke on a conference call yesterday, the company was seeing some encouraging early signs but it was off a very small scale right now.

The weaker-than-expected forecast comes with Linkedin's financial results for the first quarter overtaking analysts estimates, in the eighth straight quarter of the company beating Wall Street targets.

Thanks to the winning streak the stock has risen 74 per cent since the start of the year, creating what, according to analysts were overheated Wall Street expectations.

Meanwhile the results raise concern that mobile advertising would be slow to kick in.

Linkedin, based in Mountain View, California, dropped as low as $177 in extended trading, after rising 3.5 per cent to $201.67 at yesterday's close in New York. Before the report, the stock had gained 76 percent this year.

According to the company's statement, revenue in the current period would be $342 million to $347 million.

While the company revamped its smartphone site and announced a $90 million spend on mobile newsreader Pulse, ad revenue on wireless devices might not be rising fast enough to keep up with traffic growth analysts said.

Earlier, the company's stock had more had more than quadrupled since its initial public offering almost two years ago, that gave it a price-to-earnings ratio of 576.2. Though less expensive than Facebook Inc (FB), which trading for  1,500 times earnings, the ratio came in as many times higher than Google Inc or Yahoo! Inc, which were valued at less than 26 times earnings.

Linkedin's results come a day after Facebook, the biggest social-networking site, reported revenue that bettered analysts' predictions. The social network's  mobile business made up around 30 per cent of ad sales (See: Facebook revenues top estimates on mobile advertising).