LinkedIn Corp (LNKD), Facebook Inc (FB): This Social Network Does…What?

A social network literally out of this realm

Not enough is said regarding the Chinese social networking company SINA Corp (NASDAQ:SINA). That’s because outside of China the company is not well-known. But think about this, within China, companies like Facebook Inc (NASDAQ:FB) and sometimes LinkedIn Corp (NYSE:LNKD) are blocked for censorship reasons. That gives Sina tremendous advantage in a country with a more than one billion people.

SINA Corp (NASDAQ:SINA)’s ability to thrive is only limited by its ability to cut costs. Yes, they have the user potential, but it appears that they are ignoring monetary responsibility. In 2012, the company had revenues of $529 million. But their operating expenses were $537 million! You can’t make money if you’re spending too much, and Sina’s 64% increase in research and development costs to $108 million for 2012 is too much. It’s no wonder they had a loss of $8 million last year, but it is better than their $33 million loss in 2011.

Too much focus on users

Bottom line: both Facebook Inc (NASDAQ:FB) and SINA Corp (NASDAQ:SINA) are too focused on users, possibly at the expense of monetization. The reality is that user growth will slow at some point and the big question that will not be ignored is how to make money from users. LinkedIn Corp (NYSE:LNKD) spent 97% more in marketing-related expenses in 2012, up from $164 million in 2011. But the company isn’t sweating users, other than spending to acquire them and show HR departments that they have the tools to find the right job candidates.

The job market is more complex than ever, and LinkedIn Corp (NYSE:LNKD) isn’t just a social network. It’s a professional tool. That makes it better than Facebook Inc (NASDAQ:FB) and better than what SINA Corp (NASDAQ:SINA) offers, long-term.

The article Why LinkedIn Will Always Be Better Than Facebook originally appeared on

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Facebook, LinkedIn, and SINA . The Motley Fool owns shares of Facebook, LinkedIn, and SINA.

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