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LinkedIn beats Street, outstrips social media rivals

By Gerry Shih

SAN FRANCISCO (Reuters) - LinkedIn Corp extended its hot streak on Thursday, announcing both blow-out quarterly profits and a bullish forecast for the new year that exceeded Wall Street's already lofty expectations.

The results reaffirmed the "professional" social network's reputation as a fast-growing but sure-footed business -- and the star exception in a mostly disappointing social media sector.

Excluding certain items, net income was $40.2 million, or 35 cents a share, well above the 19 cents expected by analysts polled by Thomson Reuters I/B/E/S.

The results meant LinkedIn beat analyst estimates for the seventh quarter in a row and sent shares of the company, which have doubled in the past 12 months, soaring 9 percent higher to $135 after hours.

Revenue rose a better-than-expected 81 percent from a year ago to $303.6 million, as millions of new job seekers and corporate recruiters around the world signed up with LinkedIn to post resumes or poach competitors' employees.

The company offered bullish forecasts for the first quarter as well, projecting revenue between $305 million and $310 million, above analyst estimates of $301 million.

"You can pick out a lot of things that were great, from customer adds to accelerating revenue to growth in international," said Kerry Rice, an analyst at Needham & Co. "On top of that, guidance is pretty outstanding. And from a historical perspective, they'll likely beat those numbers too."

TURBOCHARGED GROWTH

Founded by former PayPal employees in 2002, LinkedIn remains one of the most profitable Web companies, with gross margins approaching 90 percent.

At a time when Facebook Inc stock trades 25 percent below its initial public offering price and basic questions loom over the business models of online gaming group Zynga Inc and daily deals company Groupon Inc, LinkedIn has proved it can consistently make money by selling access to its 200 million users' resumes since it went public in May 2011 at $45 a share.

The size of LinkedIn's user base has reinforced its position against competitors, few of whom pose a serious challenge. Facebook only recently announced a "Jobs Board" tool in November. And on Thursday, shares of Monster Worldwide Inc fell 7 percent after the human resources company reported a quarterly loss and said it would pull out of several countries.

Analysts in recent months, however, have begun to question how long LinkedIn can sustain its turbocharged growth as it becomes saturated in some U.S. markets.

On Thursday's earnings call, company executives said the majority of LinkedIn's users are now based outside of the United States, and the company is aggressively targeting job markets in Hong Kong and Brazil.

Sales from international markets more than doubled over the past year to $114.6 million, or 38 percent of total revenue in the quarter, the company said.

In response to a slowdown in user growth and the slide in page views, LinkedIn has introduced some social media features to encourage visitors to click more on its site, as opposed to uploading their resumes and never coming back.

LinkedIn has introduced personal blogs by successful businesspeople like Sir Richard Branson, whom users can "follow" for updates.

Chief Executive Jeff Weiner told analysts on Thursday's earnings call that the blog series, called "Influencers," has exceeded expectations and now features contributions from business luminaries like GE Chairman Jeffrey Immelt and investor Mark Cuban.

Other social mechanics, such as a recent addition that encouraged users to endorse their colleagues for their professional skills, also helped keep users coming back to the site more frequently, Weiner said.

The endorsements feature had the effect of "creating the right kind of viral loops," he said.

(Editing by Matthew Lewis and Richard Pullin)

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