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LinkedIn Preps a Bigger IPO, but It's No Facebook


LinkedIn, the business professional social network, is upping its expectations for its much-anticipated initial public offering, which it now believes can pull in as much as $274 million.The company released the pricing for its IPO Monday morning, May 9, and is now prepared to offer 7.84 million shares at $32 to $35 each, according to its updated S-1. Its optimism is a good sign for LinkedIn, but may not be a good indicator about the overall appetite for more consumer-oriented tech firms such as Facebook and Zynga, which have very different business models.

LinkedIn's pricing is a significant increase over the $175 million LinkedIn said it was seeking to raise back in January and suggests the company is receiving more interest in its shares. LinkedIn could command a market value of $3.3 billion at the midpoint of the proposed range. The company, which will trade under the symbol LNKD, hopes to make its debut this month on the New York Stock Exchange.

LinkedIn pulled in $243.1 million in revenue last year, an increase of 102 percent over 2009, with $15.4 million in net income, a 487 percent increase. In the first quarter of this year, it made $93.9 million, an increase of 110 percent over the same period in 2010, while net income was $2.1 million. The company, which makes money through hiring and marketing solutions and premium subscriptions, doesn't expect to make a profit this year as it ramps up spending to upgrade its technology and infrastructure and expand its sales force. LinkedIn recently eclipsed the 100 million mark in registered users and now boasts 102 million registered users as of Mar. 31.

Upcoming Tech IPOs

A big debut by LinkedIn could help set the tone for upcoming IPOs from Kayak, Pandora, Fusion-io, and others. And it could further heat up the market for public offerings. Freescale Semiconductor also announced terms on Monday for its upcoming IPO, and Angry Birds studio Rovio said it was also looking at going public in the next few years.

Peter Falvey, managing director and founder of tech investment bank Revolutions Partners, said it's a mistake to lump LinkedIn with Facebook, Twitter, Zynga, and Groupon because of its different business model and size. But the company could serve as a good barometer for upcoming tech IPOs and could set the stage for bigger debuts to come.

"I think as long as you see the equity markets hold and the economy doesn't turn bad, you'll see a strong second half of the year," Falvey said. "These companies will attract more attention to IPOs, and it will increase interest in subsequent offering later this year."

It'll be good to see how LinkedIn performs out of the gate. Boingo (WIFI) made its debut last week and closed with a loss on the first day. LinkedIn will likely do better, considering its name recognition and its recent progress. But how much better could give us a sense of how much optimism there is in tech IPOs.Giants like Facebook, Zynga, and others are seeing valuations soar in secondary markets, so it could be LinkedIn is also headed for a big first day. But we'll have to see firsthand how it does. As Falvey said, it's a little presumptuous to lump all these IPOs together. But a good showing by LinkedIn could provide a nice bit of momentum for an IPO market that has been dormant for a while and is now getting hot again.

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Ryan has covered personal technology and wireless for the San Francisco Chronicle and now writes for GigaOM.

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