Morning Coffee – LinkedIn Webinar, HP Services & Wal-Mart

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LinkedIn (NYSE:LNKD) was one of the most highly anticipated IPOs of 2011. The company priced its IPO at $45 and since then the stock has traded from $122 to $60. We are hosting a webinar to discuss the outlook for LinkedIn and what factors could drive upside to estimates as well as what risk factors lay ahead. See details here . Also this morning we look at HP's (NYSE:HPQ) tech services business as its CEO, Leo Apotheker, announced plans to build out its services and R&D capabilities in the country. Finally, on the heels of the BJ Wholesale Club buyout, we test readers' knowledge on how much Sam's Club is worth separate from Wal-Mart (NYSE:WMT).

Company of the Day - LinkedIn

LinkedIn (NYSE:LNKD), which gets about half of its stock value from its recruitment services and job postings business, also derives about 28% of its value from advertisements and marketing. Revenue per 1,000 page views ( RPM ), a parameter used to measure ad pricing, is an important metric for the online ad market. In this space, LinkedIn competes with big names like Facebook, Yahoo (NASDAQ:YHOO) and Google (NASDAQ:GOOG).

2 Key Value Drivers for LinkedIn

1) Average number of corporate customers : LinkedIn offers several recruitment solutions to its corporate clients. These solutions include simple job listings services as well as advanced recruitment solutions such as LinkedIn Recruiter, Talent Direct, Custom Company Profiles and Jobs Network. These tools help corporates identify the best matches from the largest and the most qualified pool of passive candidates.

The average number of corporate clients for LinkedIn has increased at a fast rate over the last few years, from 450 in 2008 to more than 2,700 in 2010. We expect this number to continue to grow to around 30,000 by the end of our forecast period.

2) Revenue per corporate customer: We estimate that revenue per corporate customer declined from around $26,000 in 2008 to around $22,000 in 2009 and 2010. The steep decline from 2008 to 2009 is attributable to the greater mix of large corporations, that paid higher fees, in 2008.

We believe that revenue per corporate customer will decline slightly over the near term as the mix of smaller corporate and business customers grows. Over the long-term, we expect a slight increase in this parameter as the corporate and business customer base growth slows and LinkedIn is able to increase revenue per customer through the introduction of new features and services.

See our complete analysis for LinkedIn stock here

Forecast of the Day - HP Tech Services

HP Services make up 36% of our price estimate. This division includes infrastructure outsourcing, technology services, application outsourcing and business process outsourcing. Technology services often needed include business critical services like minimizing downtime during outages of critical hardware systems; data security services; server services - deployment, management and lifecycle support; and storage services like virtualization, capacity utilization, power and information access.

See our complete analysis for HP stock here

BJ's Wholesale club was recently bought for $2.8 billion by private equity companies. What is the standalone value of Sam's Club, which is owned by Wal-Mart?

  1. $13 billion
  2. $6 billion
  3. $21 billion
  4. $3 billion

See our complete analysis for LinkedIn stock here



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: RPM

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