LinkedIn IPO to value firm at $3.3bn

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LinkedIn's IPO in New York next week is expected to spark a gold rush of social networking flotations

Josh Halliday and Dominic Rushe,guardian.co.uk

Inside LinkedIn HQ, Mountain View, California. The firm expects to raise up to $274m in the first IPO for a major US social networking group Photograph: David Paul Morris/Bloomberg News

LinkedIn, the social network for business professionals, will be valued at $3.3bn (£2bn) when it floats on the New York Stock Exchange next week, setting off a multimillion-dollar gold rush of social media companies.

The nine-year-old social network plans to float on the NYSE on 19 May and said it could raise as much as $274m. In January the firm said it was looking to raise $175m in the initial public offering.

The firm is cashing in amid an increasingly frenzied investor appetite for the next generation of internet firms. It will become the first major US social network to go public and follows the float of Renren, China's version of facebook, which saw its stock soar 40% in its first day of trading on the NYSE earlier this month.

LinkedIn's float is expected to be followed by a wave of flotations including those of Groupon, the online discount business; Zynga, maker of the Cityville and Farmville online games, and Facebook. Facebook's valuation has soared in recent months as investors clamour for shares in the privately held company. The company was valued at $50bn when investors put in more cash in January but its privately held shares have since traded at prices that suggest the firm could be worth more than $70bn.


Analysts said LinkedIn's flotation would be seen as the first real indicator of investor appetite for US social media firms. Colin Gillis, internet analyst at BGC Partner in New York, said: "Renren had everything – it's Chinese and it's social networking. LinkedIn is going to be the first real indicator of demand for the US social network firms."

LinkedIn has about 100 million users and turned a profit of $15.4m on revenues of $243m in 2010. Though other social networks are far larger, notably Facebook with about 700 million users worldwide, the business orientation of LinkedIn's members make them potentially more valuable to advertisers. The company managed to grow through the recession and turned profitable last year having made operating losses from 2007 until 2009.

At $3.3bn, LinkedIn would be priced at 13 times last year's revenues of $243m – a lower multiple than its peers. Facebook has a multiple of 32 times its estimated 2010 sales, according to Nyppex, a private-share market.

The company will offer 7.8m shares at $32-$35 each – the top of its previously expected price range. It said it intends to use the proceeds for general corporate purposes, including working capital, sales and marketing, general and administrative matters and capital expenditures.

Reid Hoffman, co-founder and chairman, and the chief executive, Jeffrey Weiner, are selling a small number of shares, less than 0.5% of the company. They will join the company's other shareholders, Bain Capital, Goldman Sachs and McGraw-Hill, in selling 3m shares in the public offering. LinkedIn will offer a further 4.8m shares.

Other major investors – Sequoia Capital, Greylock Partners and Bessemer Venture Partners, which together own about two-fifths of the company – will not be participating.

Unlike more mainstream advertising-supported social networks such as Facebook and Twitter, LinkedIn has a "freemium" commercial model, offering premium services to paying customers, while basic features and registration are free.

According to its flotation prospectus, filed in January, revenue from paying users dropped to 27% of overall revenues for the first nine months of last year, down from 41% in the previous year. Job listings and recruitment contributed 41% of net revenue in the same period, up from 29%. Advertising revenue remained steady at 32%.

Morgan Stanley, Bank of America and JP Morgan are LinkedIn's three lead advisers.

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Apple bumps Google as most valuable brand

by Don Reisinger

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Chalk another one up for Apple.

Apple is the world's most valuable brand with a value of $153.3 billion, according to Millard Brown Optimor's annual "BrandZ: Top 100 Most Valuable Global Brands" study released today. In just one year, Apple's brand value has increased by 84 percent, the study said.
Google, the leader in the study for four years running, was knocked down to second place this year, losing 2 percent of its brand value to end up at $111.5 billion.

 

(Credit: Millard Brown Optimor)

IBM, McDonald's, and Microsoft rounded out the top five with brand values of $100.8 billion, $81 billion, and $78.2 billion in brand value, respectively.

The marketing and advertising industry, not surprisingly, believes strongly in the importance of brand value. "Strong brands, while not immune to the vicissitudes of the market, are more protected, prepared, resourceful and resilient," David Roth of WPP, parent company of Millard Brown Optimor, said in a statement.

If that's the case, Apple's ability to insulate itself from market issues has exploded over the last several years. Millard Brown Optimor said Apple's brand value has increased 859 percent since 2006--the first year of the BrandZ study. Moreover, Apple's year-over-year growth has easily overshadowed the rest of the market. According to the study, the top 100 brands have seen their combined value increase by 17 percent to $2.4 trillion since last year.



Apple wasn't the only fast mover in the study. Facebook's brand value jumped to 35th place, increasing 246 percent year over year to $19.1 billion. China's biggest search engine, Baidu, saw its brand value increase by 141 percent year over year to $22.5 billion, which gave it 29th place.

Such companies have helped tech lead the way in brand value. The researchers said tech companies make up one-third of the top 100 brands worldwide. Amazon.com was also able to beat Wal-Mart to become the most valuable retail brand with a value of $37.6 billion.

Emerging markets are playing a bigger role in the top 100 list. Back in 2006, just two companies from emerging markets made the list. Last year, that tally reached 13. And this year, 19 of the top 100 brands came from emerging markets.

Millard Brown Optimor's BrandZ study is derived from both financial performance and "in-depth" interviews of consumers about their perceptions of brands and why they choose a specific product over another. The company's database includes 2 million such interviews from 30 countries.

Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, posting at The Digital Home. He is not an employee of CNET. Disclosure.

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Targeted killngs, a human rights concern?

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Global Trends By MARTIN KHOR



The killing of Osama bin Laden, the bombing of Muammar Gaddafi’s house and the deaths of civilians by drone missile attacks are some incidents that highlight the many questions of the legality and human rights in the issue of targeted killings.

THE killing of Osama bin Laden was undoubtedly the biggest news last week. While the shooting of the al-Qaeda chief filled the headlines for days, the confusion over what happened and questions over legality of the killing had taken over the discussion soon after.

United States officials had originally announced that Osama was killed in a firefight in the house in Pakistan he was occupying, and that he used his wife as a human shield.

A few days later, it was admitted he had been unarmed, and there was no use of a human shield. Instead, there was no firing on the US forces, except for one person at the initial stage.

The death of Osama came a few days after the Nato bombing of the house of Libyan leader Muammar Gaddafi, which the Libyan authorities said had killed his son and several grandchildren.

This raised the question of whether it is legal for one state or states to kill persons, including political leaders, in other states.

These two events, in Pakistan and Libya, highlight the issue of targeted killings carried out by a government agency in the territory of other countries.

For example, drones controlled by operators thousands of miles away are increasingly being used to fire missiles at buildings and vehicles in which the targeted persons are believed to be in, with high “collateral damage”.

Drone attacks killed 957 civilians in Pakistan last year, according to the Human Rights Commission of Pakistan. This was almost as many as the 1,041 civilians killed by suicide bomb attacks in the same year.

The high civilian deaths and casualties by US drone attacks have caused great public resentment in Afghanistan and Pakistan, with the leaders in these countries warning the United States to control or curb the attacks.

As worldwide public clamour increased last week for more information on what really happened during the raid on Osama’s house, United Nations human rights officials also called on the United States to disclose the full facts, including whether there had been plans to capture him.

The UN High Commissioner for Human Rights Navi Pillay called for light to be shed on the killing, stressing that all counter-terrorism operations must respect international law.

Last Friday, a joint statement was issued by Christof Heyns, UN special rapporteur on extrajudicial, summary or arbitrary executions, and Martin Scheinin, special rapporteur on protecting human rights while countering terrorism. Both report to the UN Human Rights Council.




They said that in certain exceptional cases, deadly force may be used in operations against terrorists.

“However, the norm should be that terrorists be dealt with as criminals, through legal processes of arrest, trial and judicially-decided punishment,” they added.

A Reuters report from New York on Thursday said: “The legality of the commando killing of the al-Qaeda leader is less clear under international law, some experts said. President Barack Obama got a boost in US opinion polls, but the killing raised concerns elsewhere that the United States may have gone too far in acting as policeman, judge and executioner of the world’s most wanted man.”

The German newspaper Sued­deutsche Zeitung expressed misgivings about the legality of the killing.
“Which law covers the execution of bin Laden?” wrote its senior editor Heribert Prantl.

“US law requires trials before death penalties are carried out. Executions are forbidden in countries based on rule of law. Martial law doesn’t cover the US operation either. The decision to kill the godfather of terror was political.”

In May last year, the issue of targeted killings was addressed in a landmark report to the Human Rights Council by Philip Alston, who was then UN Special Rapporteur on extrajudicial, summary or arbitrary executions.

Alston, who is a law professor in New York University, criticised the CIA-directed drone attacks, which he said had resulted in the deaths of many hundreds of civilians.

“Intelligence agencies, which by definition are determined to remain unaccountable except to their own paymasters, have no place in running programmes that kill people in other countries,” the report said.

Alston suggested that the drone killings carry a significant risk of becoming war crimes because intelligence agencies “do not generally operate within a framework which places appropriate emphasis upon ensuring compliance with international humanitarian law”.

More generally, the report said that in targeted killings, there has been a highly problematic blurring and expansion of boundaries of the relevant legal frameworks – human rights laws, laws of war and use of inter-state force.

“The result is the displacement of legal standards with a vaguely defined “licence to kill” and the creation of a major accountability vacuum,” said the report, concluding that many of the practices violate legal rules.

It warned that whatever rules the United States attempt to invoke or apply to al-Qaeda could be invoked by other states to apply to other non-state armed groups.

The failure of states to comply with their human rights law and international human rights obligations to provide transparency and accountability for targeted killings is a matter of deep concern.

In light of the increasing use of targeted killings in recent weeks and years, the issues and proposals raised in the May 2010 report should be seriously followed up.