AP News

Ahead of the Bell: LinkedIn

NEW YORK (AP) — Shares of LinkedIn Corp. fell before Friday's opening bell after the company released strong fourth-quarter results, but indicated that its performance will weaken this year as management ramps up spending while revenue growth slows.

In premarket trading, LinkedIn shares dropped $16.83, or 7.5 percent, to $206.62 about 45 minutes ahead of the market open.

LinkedIn also said it's spending $120 million to buy Bright, a startup that makes data-analysis tools matching job hunters with employers.

The acquisition could foreshadow a year of heavy investment that crimps LinkedIn's earnings. CEO Jeff Weiner also emphasized the company will be spending "significantly" on data centers and long-term projects that may take several years to pay off.

For the first quarter, management predicted revenue of $455 million to $460 million during the first three months of this year. Analysts polled by FactSet expected $471 million.

But Wall Street analysts remained optimistic, with representatives from Stifel Nicolaus, Pacific Crest Securities and Jefferies all backing top ratings for the stock.

Pacific Crest's Evan Wilson said that while the outlook is "disappointing," LinkedIn's indication of more aggressive plans for expansion into new areas will help investors understand what's next for the company.

And Jefferies analyst Brian Pitz advised investors to treat any drop in the company's stock price as a buying opportunity, noting that each of the company's businesses continue to grow faster than the markets they compete in.

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