LinkedIn Corp (LNKD): The Secret Fact That Will Change Your Mind Forever

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I’ve said it before and I’ll say it again: LinkedIn Corp (NYSE:LNKD) is a smoke and mirrors illusion. Buyer beware.

LinkedIn’s stock took a hit last week after the online professional networking service forecast called for a slowdown in future quarters while the company beefs up its infrastructure (hires more workers, invests in data centers and makes changes to online ads).

LinkedIn Corp (NYSE:LNKD)The ding came in spite of another fabulous report. But every reporting period is fabulous with LinkedIn Corp (NYSE:LNKD), in spite of the fact that the company offers little to no value. Its registered users, returning traffic, and membership are all inflated numbers just waiting to be popped! Sooner or later advertisers will see the truth behind the inflated numbers, pull out, and the company is going to struggling to survive.

But until then, the company’s first-quarter earnings and revenue topped the analyst estimates that steer Wall Street expectations.

LinkedIn makes most of its money by charging employers and headhunters for analytical tools and additional access to LinkedIn Corp (NYSE:LNKD) profiles and the site, such as the ability to send messages to users. Note: it does not make money off of advertisements? Why? Because advertisers insist on seeing numbers such as daily views, returning visits, and length of visits. Those numbers do not look good on LinkedIn, and advertisers do not get a good return on investment. And so rather than making money off of paid ads (like all other major social networking sites, like Google Inc (NASDAQ:GOOG) + and Facebook Inc (NASDAQ:FB), the company has to charge for services. Headhunters don’t need the same numbers as advertisers do. (It is incorrect and unfair to compare LinkedIn Corp (NYSE:LNKD) to social networking sites. The company is by its own definition and objectives, a career placement and recruiting site, and should be compared to those types of businesses. More on that below.)

The service now has 225 million members, up from 202 million members at the end of last year (but where do those new members live? And how many of those 225 million members frequent the site on a regular basis? Even as I ask the question, LinkedIn is attempting to add more content and give members a reason to return (because they were not and are not returning- investors need to be aware of this! Why are their heads in the sand?). That is a number that sounds good to headhunters or recruiters who like a high quantity of users. But those paying customers will soon leave the site if all of the growth is overseas, and not in the more lucrative Western markets that the recruiters pull from.

LinkedIn Corp (NYSE:LNKD) earned $22.6 million, or 20 cents per share, in the first quarter, up from $5 million, or 4 cents per share, in the same period a year earlier. Revenue grew 72 percent from last year to nearly $325 million – around$7 million higher than analysts’ expectations.

Over the first quarter, sales in LinkedIn’s core recruiting business rose 80% to $184.3 million. Its marketing solutions business (primarily ad revenue) were down slightly from the prior quarter. The company’s “premium subscriptions,” rose 73% to $65.6 million.

One reason for the revenue and earnings growth was that LinkedIn Corp (NYSE:LNKD) raised prices to $8,200 from $7,000 for corporate recruiting services. The company said it increased its user base to 218 million in the first quarter, up from 202 million in the fourth quarter. That includes reaching the one million users benchmark in Singapore, and four million benchmark in Australia. There are 19 million members in Indian, and 3 million in China.

One thing that LinkedIn does not do compared to the competition at Monster Worldwide, Inc. (NYSE:MWW) and CareerBuilder is breakdown revenue and income geographically. Monster and CareerBuilder both show North American revenue, as well as international revenue.

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