China's LinkedIn plots local recipe for growth (Reuters)

SHANGHAI (Reuters) – In a country where being connected is seen as crucial, Ushi, China's answer to LinkedIn, expects explosive growth over the next few years in the world's largest Internet market.

The professional-social networking site plans to have 10 million users in two years from the current 300,000, and aims to raise $5 million by the end of June, Dominic Penaloza, Ushi's chief executive, told Reuters in an interview on Monday.

"We're aiming to ultimately serve a very large portion of China's 40 million Internet users who are white collar or entrepreneurs. Call it 10 million in two years," said Penaloza.

"There's more proportion of Chinese who will only do business with people they have met before and people who have a mutual friend," said the Filipino-Chinese who grew up in Canada.

Venture capitalists and private equity funds have flocked to Chinese Internet firms, with U.S. IPOs of companies such as Youku and Dangdang surging as they market themselves as the YouTube and Amazon of China.

The growth is being fueled by China's Internet industry which has more than 450 million users.

Ushi, which launched in October, is backed by Milestone Capital, U.S.-based Richmond Management, Li & Fung private equity and Simon Murray & Co.

The firm competes with Tianji.com, another social-networking site that caters to professionals. Tianji, which was founded in 2005, is now part of France's Viadeo.

Tianji aims to have 10 million users by the end of the year and to start monetizing the website this year, its founder Derek Ling told Reuters separately.

The user base of Ushi, which means "outstanding professionals" in Chinese, doubled to 300,000 from 160,000 in about 60 days in March and April, Penaloza said.

Professional social-networking-site LinkedIn has a small presence in China and is one of the few foreign social-networking-sites to still have access to Chinese Internet users. Twitter and Facebook are blocked in China over censorship concerns.

LinkedIn shares more than doubled in their public trading debut this month, evoking memories of investors' love affair with Internet stocks during the dot-com boom of the late 1990s.

Like LinkedIn, Ushi's website (www.ushi.cn) has features that allow users to add connections and send messages but it is currently in a by-invitation phase. Penaloza said the firm plans to open the website to the public by the end of the year. Ushi is already monetizing users through the presence of Ushi coins which can be bought with real money.

Ushi's key difference from LinkedIn is that it focuses on offline events as Chinese people greatly value face-to-face meetings and are generally hesitant to do business with people they do not know.

"If you ask them to pay $25 equivalent in Reminbi for a three-hour networking party they would not hesitate to pay, they would line up to pay. Chinese people are like that in general," Penaloza said.

Ushi is banking on the value of "guanxi," which means connections in Mandarin, in doing business in China to make money. The firm charges Ushi coins for introductions outside your immediate circle.

The Shangai-based firm raised 10 million yuan ($1.54 million) in its initial round of fundraising.

About 5 percent of Ushi's current users are chief executives.

Last week, LinkedIn told reporters in Beijing it will seek opportunities in China to capitalize on its massive user base even though it sees the market as complicated.

Being called the LinkedIn of China has its benefits as it offers the general public a quick reference to the type of services the firm offers, Penaloza said.

"It's kind of like LinkedIn and inspired by LinkedIn but it is not the same. Ushi will work better for Chinese people because it is made in China, made by Chinese, made for Chinese and that's a huge difference," said Penaloza.

($1 = 6.493 yuan)

(Editing by Anshuman Daga and Jacqueline Wong)

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China's LinkedIn, Ushi, eyes big growth over next two (Reuters)

SHANGHAI (Reuters) – Ushi, China's answer to LinkedIn, hopes to have 10 million users in two years and to raise $5 million in its next round of fundraising, its chief executive said on Monday.

Ushi, which means outstanding professionals in Chinese, is the dominant professional-social networking site in China with more than 300,000 users. Its website is similar to LinkedIn and has features that allow users to add connections, introduce contacts and send messages.

"We're aiming to ultimately serve a very large portion of China's 40 million Internet users who are white collar or entrepreneurs. Call it 10 million in two years," Dominic Penaloza told Reuters.

Launched late last year, Ushi is backed by Milestone Capital, Richmond Management, Li & Fung private equity and Simon Murray & Co. The firm is hoping to raise $5 million in its next round of fundraising due to close at end of June.

The firm raised 10 million yuan ($1.54 million) in its initial round of fundraising. ($1 = 6.493 yuan)

(Reporting by Melanie Lee; Editing by Jacqueline Wong)

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In reminder of '90s, LinkedIn has big first day (AP)

By MICHAEL LIEDTKE, AP Technology Writer Michael Liedtke, Ap Technology Writer – Thu May 19, 6:38 pm ET

SAN FRANCISCO – There was an unmistakable echo of the dot-com boom Thursday on Wall Street.

LinkedIn, a trailblazer in the online networking craze, went public with a roaring stock offering. Within minutes, shares were trading at twice the value set by the company.

Buyers crowded the floor of the New York Stock Exchange, and financial news networks flashed LinkedIn's stock price urgently all day. By the closing bell, the company had a market value of $9 billion, the highest for any Internet company since Google had its initial public offering seven years ago. Millionaires and even one billionaire were made, at least on paper.

The stock, issued at $45, went as high as $122.70 just before noon and closed at $94.25 on a trading volume of 30 million shares. All this for a company that skeptics say amounts to an online Rolodex, a place on the Internet for professionals to post resumes and connect with one another and potential employers.

It was enough to remind some people on Wall Street of the heady late 1990s and the debuts of companies like Netscape Communications — and, more infamously, long-forgotten names like Pets.com and Webvan. Investors wondered whether LinkedIn will be a precursor to another financial frenzy in Silicon Valley.

"I definitely think this will be a catalyst," said longtime technology investor and analyst Michael Moe, CEO of Global Silicon Valley Asset Management. "Investors who like growth stocks have been stuck in a desert for a long time, and now it's like they have found this great pitcher of water."

LinkedIn is already worth $9 billion, or 18 times its projected revenue this year. Major Internet companies, including Google, trade at an average of about five times projected revenue, according to an analysis by Capital IQ.

Using another measure, price-to-earnings ratio, which compares a company's market value with its profit, LinkedIn finished the day at a staggering 554 — a number reminiscent of the late 1990s tech bubble. By comparison, the average P/E ratio of technology companies in the Standard & Poor's 500 index like Google and Apple is 15.

Two-thirds of LinkedIn's revenue comes from the fees it charges to help companies find and hire workers. Francis Gaskins, president of IPOdesktop.com, said that makes the company more like Monster, an employment firm where business depends a lot on the health of the job market.

"Can we stop asking if we are in a bubble now?" venture capitalist Mitchell Kertzman said after hearing that LinkedIn stock was trading above $100. "We are clearly in a valuation bubble."

If the stock market is thirsty for more businesses that connect people on the Internet, there's a backlog of privately held companies that might one day satisfy it.

The short list includes Twitter, the 140-characters-or-fewer messaging service; Zynga, which makes online games like FarmVille; Groupon, the coupon site; and, of course, Facebook, the social network with more than 500 million users.

None of those companies has revealed specific plans for going public. Facebook has at least dangled the possibility of filing for an IPO before May 2012. A private investment led by Goldman Sachs Group Inc. valued Facebook at $50 billion in January.

"If people are this excited about a professional networking service like LinkedIn, you can imagine what kind of frenzy there is going to be when Facebook goes public," said eMarketer analyst Debra Aho Williamson.

The 109 percent first-day gain for LinkedIn, based in Mountain View, Calif., nearly mirrored Netscape's first day when it went public on Aug. 9, 1995. Netscape rose that day from $28 to a close of $58.25, or 108 percent.

Netscape co-founder Marc Andreessen's venture capital firm, Andreessen Horowitz, has invested in Twitter, Groupon, Zynga and Facebook.

As an individual, Andreessen was also an early investor in LinkedIn and is among the more than 102 million people who have posted their resumes and profiles on its website, a buttoned-down version of Facebook's online playground.

It may be as much fun as playing games, chatting and posting pictures on Facebook, but LinkedIn has steadily grown since it started in 2003 and it's now adding about a million accounts a week.

In a key distinction from the dot-com days, it also makes money — $3.4 million last year on revenue of $243 million. Its revenue more than doubled during the first three months of this year, putting it on pace to bring in about $500 million in 2011 from advertising and fees.

Kertzman, managing director of Hummer Winblad Venture Partners, was CEO of Liberate Technologies, a maker of software for TV set-top boxes, during the height of the dot-com boom. In 2000, its market value soared to $12 billion.

"I knew something was wrong because I knew we weren't worth that much and it scared the hell out of me," Kertzman said.

Aaron Levie, CEO of an Internet storage service called Box.net, sees things differently. Levie, who is 26 and was in high school during the dot-com boom, thinks it's a good sign that LinkedIn, Facebook and other companies are taking their time to build companies that make money before going public.

"You can tell this is a very different period than the late `90s," Levie said. "Silicon Valley is definitely back, and much healthier."

LinkedIn's CEO, Jeff Weiner, said he doesn't plan to dwell on high investor expectations.

"It's exciting, but it's a point in time," Weiner said a few hours after he rang the opening bell at the stock exchange, where LinkedIn's shares traded under the symbol LNKD. "One day's trading is not going to be too meaningful, and the same holds true for the next few days and the next few months. I know it sounds a little like a cliche, but we are in this for the long haul."

Weiner, a 41-year-old former Yahoo executive who became head of LinkedIn two years ago, still took some time to celebrate the IPO in a meeting that was beamed to all of LinkedIn's roughly 1,300 employees from the company's offices in the Empire State Building.

Many of LinkedIn's employees are now millionaires, at least on paper. The richest is co-founder and executive chairman Reid Hoffman. Already considered one of the smartest and best-connected people in Silicon Valley, Hoffman joined the ranks of the world's billionaires Thursday. Hoffman, 43, owns a 20 percent stake in LinkedIn, good for about $1.8 billion.

That value could wildly fluctuate, based on how other hot technology IPOs have performed through the years.

Until LinkedIn came along, software maker VMware Inc. had boasted Silicon Valley's biggest one-day gain among IPOs completed during the decade after the dot-com bubble burst. VMware stock rose 76 percent on the first day of trading in August 2007. Thirteen months later, it had fallen below its IPO price of $29.

VMware's experience also serves as a reminder that what goes up and comes down can go up again. The company's stock closed Thursday at $93.89.

___

AP Business Writer Tali Arbel and AP Technology Writer Barbara Ortutay in New York contributed to this report.

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Stocks follow LinkedIn IPO higher (AP)

By DANIEL WAGNER and DAVID K. RANDALL, AP Business Writers Daniel Wagner And David K. Randall, Ap Business Writers – 28 mins ago

NEW YORK – The biggest Internet IPO since Google combined with a drop in oil prices to send the broad stock market higher.

Shares of social networking company LinkedIn jumped 109 percent to $94.25 on the first day they began trading on the New York Stock Exchange under the ticker symbol "LNKD." The debut is seen as a preview of other social networking sites that are expected to start trading during the next year. The list of candidates includes the online messaging service Twitter, game maker Zynga, and the biggest social network of all, Facebook.

"LinkedIn represents the first opportunity for the average investor to participate in what looks like a lasting, powerful trend of social media," said Lawrence Creatura, a portfolio manager at Federated Investors. "They're frothy with excitement, and that's being imputed into the share price."

LinkedIn finished the day with a gigantic price-to-earnings ratio of 554, a valuation reminiscent of Internet stocks during the late 1990s tech bubble. By comparison, the average price-to-earnings ratio of technology companies in the S&P 500 index like Apple Inc. and Google Inc. is 15.

Sumeet Jain, a principal with venture investing firm CMEA Capital, said LinkedIn's IPO suggests that the number of mergers and acquisitions will increase this year as social networking companies grow, a potential boon for the stock market.

LinkedIn is "going to have to be quite aggressive" to meet investors' lofty expectations, Jain said. "All the rest of the companies in the pipeline, when they're all public companies they will be extraordinarily active acquirers as well."

The Dow Jones industrial average rose 45.14, or 0.4 percent, to close at 12,605.32. The S&P 500 gained 2.92, or 0.2 percent, to 1,343.60. The Nasdaq composite index rose 8.31, or 0.3 percent, to 2,823.31.

Oil prices fell back below $100 a barrel after an international agency said there is an "urgent need" for refineries to produce more gasoline and bring down pump prices in order to prevent a downturn in the global economy. Delta Air Lines Inc. rose 4.1 percent and JetBlue Airways Corp. rose 1.4 percent on expectations that their fuel costs would decrease.

Oil prices have fallen about 13 percent since the beginning of May as part of a broad-sell off in commodities due to fears that the economy is slowing. Despite LinkedIn's gains, concerns about the economy weighed on the market again Thursday.

The National Association of Realtors said fewer people purchased previously occupied homes in April. The Conference Board's outlook for future economic activity decreased for the first time since June 2010. And the Philadelphia Federal Reserve said that its measure of manufacturing activity slumped to its lowest reading since October.

The mixed news confirmed investors' belief that economic growth could be slow in the coming months. The yield on the benchmark 10-year Treasury note had risen as high as 3.24 percent following the positive jobs news but was back down to 3.17 percent, just below the rate it was trading at late Wednesday. Bond yields tend to rise when investors anticipate stronger economic growth.

"The fact that yields are still up today, even after this relatively weak set of data, tells me that people have factored in" expectations that the economy will grow more slowly this quarter, said Paul Zemsky, chief investment officer of multi-asset strategies for ING Investment Management.

With little fresh economic or corporate data expected in the next two weeks, the market will be "pretty much trading sideways unless something happens to throw people for a loop again," Zemsky said.

Stocks opened higher after the Department of Labor reported that applications for unemployment dropped more than expected. Indexes gave up those early gains after three negative reports on the economy came out at midmorning.

In a sign that the U.S. consumer recovery remains uneven, Big Lots Inc. fell nearly 11 percent after news reports that it decided not to sell itself. The Wall Street Journal said late Wednesday that the company received bids from two private-equity groups that were lower than it had hoped.

Sears Holding Corp. reported softer sales at its Kmart and Sears stores, causing a first-quarter loss of $1.58 per share, worse than analysts expected. The stock fell 2.6 percent.

Two stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 3.3 billion shares.

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LinkedIn share price more than doubles in NYSE debut (Reuters)

NEW YORK (Reuters) – LinkedIn Corp's shares more than doubled in their public trading debut on Thursday, evoking memories of the investor love affair with Internet stocks during the dot-com boom of the late 1990s.

Shares of the online professional social networking company closed at $94.25, 109 percent above their $45 initial public offering price. They rose as high as $121.97, in their first day of trading on the New York Stock Exchange.

Just two weeks ago, LinkedIn proposed a price range for the IPO that valued it at just over $3 billion. Less than a decade ago, the company was nothing more than an ambitious idea and a computer in one man's living room.

Now, its $8.9 billion market value makes it larger than Harley Davidson Inc, Moodys Corp and Chipotle Mexican Grill Inc.

"It seems to bring back memories of the tech bubble," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Based on what I know it seems like investors are a little overly enthusiastic."

One hedge fund manager who flipped his holdings in the low-80's described how difficult it was to get shares. "I got 500 shares and was told to consider myself lucky," he said.

"There are billion-dollar institutions that are not getting any stock," he said, recounting something he learned from salesperson at one of the lead banks.

LinkedIn is the first prominent U.S. social networking company to publicly test how hungry investors are for social media companies such as Facebook, Groupon, Twitter and Zynga.

Such exuberant debut trading in recent years has been the prerogative of Chinese Internet stocks. LinkedIn shares marked the biggest first-day price jump since shares of Qihoo 360 Technology Co, China's third most-popular Internet company, rose 134 percent in their NYSE debut.

Like Facebook, Mountain View, California-based LinkedIn allows users to create profile pages displaying a picture and details about themselves.

While Facebook often has more informal profiles that may include a photo album from a recent trip, for example, LinkedIn is seen as the place for a professional persona. The profile pages are basically an online database of electronic resumes.

The company's 2010 net income was $3.4 million attributable to common stockholders on net revenue of $243.1 million.

As of March 31, LinkedIn had 1,288 employees and 102 million registered members. Based on LinkedIn's current market value, each of those users is valued at about $96.

MILLIONAIRES AND BILLIONAIRES, OH MY!

LinkedIn Chief Executive Jeff Weiner, a newly minted millionaire, shrugged off the trading craze or even worries that the pricing underestimated the appetite for the stock.

"Speaking for myself, personally I'm not even thinking twice about where the price is today and leaving money on the table or even anything remotely along those lines," he said, adding that the stock "will take care of itself."

He also cautioned against viewing LinkedIn as a proxy for other potential big-name IPOs, saying those stocks would also be driven by their fundamental value.

Weiner, who sold about 5 percent of his holdings in the offering, made $5.2 million on the IPO. Based on the latest stock price, his remaining stake in LinkedIn is worth about $208 million.

LinkedIn's co-founder and ex-PayPal executive Reid Hoffman made $5.2 million selling less than 1 percent of his shares. His remaining stake in the company -- 21.7 percent of the voting power -- is now worth about $1.8 billion.

The company raised $352.8 million on Wednesday by selling 8 percent of the company, or 7.84 million shares, for $45 apiece. The company increased its anticipated price range by $10 on Tuesday to $42 to $45 per share.

Bankers typically try to price an IPO so that the stock rises about 15 percent on the first day of trading -- enough to reward investors who made a bet, but not so much that the company and shareholders feel they could have made much more.

The company's shares were sold at about 17.5 times its 2010 sales. They are now worth 37 times the company's 2010 sales. By comparison, Google Inc's shares are valued at just under six times 2010 sales.

"There's a lot of enthusiasm and maybe there's excess demand because there is just not a whole lot of supply of these types of companies in the market. That can drive a richer valuation but it's not a bubble," said Scott Cutler, co-head of U.S. listings at NYSE.

Underwriters on the IPO were led by Morgan Stanley, Bank of America Merrill Lynch and JPMorgan.

(Reporting by Clare Baldwin and Alina Selyukh. Additional reporting by Edward Krudy, Rodrigo Campos, Angela Moon, Dan Wilchins, Chris Sanders, Caroline Valetkevitch and IFR's Stephen Lacey; Editing by Lisa Von Ahn, Maureen Bavdek and Robert MacMillan)

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