LNKD Stock: LinkedIn Corp Was a Bargain-Buy for Microsoft

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Last quarter's numbers from professional networking website LinkedIn Corp (NYSE: LNKD ) - one of its last as its own publicly traded entity - were outstanding. The company reported an operating profit of $1.13 per share of LNKD, on revenue of $933 million. Analysts were only expecting per-share earnings of 78 cents and $898 million worth of revenue, up 42% and 26%, respectively, from the year-ago Q2 profit of 55 cents per share and sales of $712 million.

LNKD Stock: LinkedIn Was a Bargain-Buy for Microsoft

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The company is driving that growth the right way as well. During the second quarter, the member headcount grew 18% on a year-over-year basis, to 450 million.

LNKD Earnings Results

Unique visitors were up 9%, while page views grew grew 32%. Those results largely underscore the first quarter's engagement success, when its talent solutions division drove more than a 40% improvement in revenue, and membership growth itself was up nearly 20%. Visits were up 9% on a year-over-year basis as well.

CEO Jeff Weiner commented on the numbers:

" In Q2, we demonstrated good momentum with our member and customers, and delivered strong financial results. Continued product innovation drove increased levels of engagement, and strengthened our enterprise offerings. We believe joining forces with Microsoft enables us to further accelerate and scale our ability to deliver value and create economic opportunity for every member of the global workforce."

Q2's numbers also extend to a long earnings and revenue growth streak enjoyed by LNKD investors, and one that was heating up as of Q1, even if the company has been seeking to sandbag expectations.

Near the beginning of this year, the company cautioned its first-quarter revenue would only be $820 million (about 5% lower than estimates), while first-quarter profits per share of LNKD stock would only roll in at 55 cents per share versus estimates of 74 cents.

Nevertheless, the company ended up reporting income of 74 cents per share on $860 million in revenue. For the recently completed second quarter, the company was calling for a top line of between $885 million and $890 million, translating into earnings of between 74 and 77 cents per share of LNKD stock. LinkedIn is now halfway through its fifth straight year of operating earnings growth and earnings beats, and has topped earnings estimates every quarter for over three years now.

The transition away from advertising and toward subscription-based models is also the new norm.

Prior to the earnings announcement, Cantor analyst Youssef Squali explained "this negative impact [weakening display ad revenue] will dissipate, leaving Sponsored Updates as the key segment driver." Squali also believes premium subscriptions will drive revenue growth in the near future, as they already have been of late.

The company has certainly been sending a similar message just within the last few weeks. In July, it acquired point drive, which allows users to share visual content with a salespersons prospects , and just a week before that it upgraded its Sales Navigator platform.

As Weiner alluded, LinkedIn will soon be acquired by Microsoft Corporation (NASDAQ: MSFT ) after the software giant won a bidding war for the company in June, with an offer of $26.2 billion … in cash.

Although Microsoft is predominantly in the PC and productivity software business, the same professionals interested in its legacy products are also apt to be interested in, if not already a member of, the professional networking website. LinkedIn will also round out Microsoft's 2012 deal to acquire Yammer, which is an intra-organization networking platform. The deals underscore CEO Satya Nadella's aim to spread Microsoft's wings beyond operating systems and office suites.

Bottom Line on LNKD Stock

Microsoft is taking on nearly $20 billion in debt to fund the acquisition , which values LNKD at $196 per share.

It's not entirely clear if Nedella's plans for LinkedIn call for major changes to the way the site operates, nor if they align with LinkedIn CEO Jeff Weiner's new vision for the website unveiled earlier this year. It is clear, however, LinkedIn is bringing a great deal of growth with it en route to becoming part of the Microsoft family.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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The post LNKD Stock: LinkedIn Corp Was a Bargain-Buy for Microsoft appeared first on InvestorPlace .

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

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

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