Friday, May 20, 2011

Biz Break: LinkedIn IPO: Social media pioneer's value soars to $8.9B

By Frank Michael Russell
Posted: 05/19/2011 01:23:31 PM PDT
Updated: 05/19/2011 03:47:39 PM PDT

Today: It was a big day for LinkedIn investors, especially founder Reid Hoffman. Plus: Mortgage rates fall to a low for 2011 and other real estate news. And: Amazon, Comcast, Intel (INTC), Silicon Valley tech stocks.

LinkedIn's IPO

Shares of LinkedIn -- the Mountain View professional networking site -- skyrocketed 109 percent today from their offering price as they began trading on the New York Stock Exchange.

The shares debuted at $83 when trading began this morning, then climbed as high as $122.70. They priced late Wednesday at $45 each, the high end of the expected range of $42 to $45 (which, you might recall, was raised Tuesday from an earlier $32 to $35). Today, the shares closed at $94.25, up $49.25, or 109.4 percent, from the offering price.

LinkedIn is the first big social media name to sell its stock to the public, although Palo Alto social networking powerhouse Facebook, San Francisco microblogging pioneer Twitter and San Francisco social-games upstart Zynga are expected to have their own IPOs, perhaps in the next year or

"There's tremendous investor appetite for shares of social media companies, particularly the premier ones like LinkedIn," Lou Kerner of Wedbush Securities in New York told Bloomberg News.

LinkedIn now has a market value of $8.9 billion -- more than such well-known Silicon Valley names as Electronic Arts (ERTS),
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Advanced Micro Devices and National Semiconductor.

According to Merc venture capital columnist Peter Delevett, the IPO was a huge success for LinkedIn investors including founder and Executive Chairman Reid Hoffman and venture capital firms Sequoia Capital, Bessemer Ventures and Greylock Partners.

In particular, Merc tech columnist Chris O'Brien wrote, the LinkedIn IPO solidifies Hoffman's place in the history of Silicon Valley innovators. "Reid is getting the recognition he deserves as a model entrepreneur and investor," prominent Silicon Valley angel investor Ron Conway told O'Brien. "He is a true visionary."

In an interview this morning with Bloomberg Television, LinkedIn CEO Jeff Weiner said he was pleased with the IPO. "We are very comfortable with where we priced," he said. "We spent a lot of time with the right kind of investors -- folks who understand the story, the fundamentals, who are in it for the long haul. That's our focus."

As for today's trading, Weiner told the news service, "We'll leave that to the marketplace. I wouldn't read too much into any one day of trading. We're in this for the long term. As we continue to focus on executing our business, the fundamentals will be there and the stock price will take care of itself."

Real estate update

Mortgage rates: They dropped to new lows for 2011 for 30-year and 15-year fixed home loans, Freddie Mac reported today.

Nationwide, the average rate on a 30-year fixed mortgage this week was 4.61 percent, down from 4.63 percent last week and 4.84 percent a year earlier. For 15-year fixed loans, the average rate was 3.8 percent, down from 3.82 percent last week and 4.24 percent a year ago.

Rates for one-year adjustable rate mortgages and five-year hybrid ARMs, though, edged higher. "Fixed mortgage rates inched down for the fifth consecutive week as financial markets try to ascertain the current strength of the
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U.S. home sales dropped in April, foreclosures declined
Fixed mortgage rates touch new lows for 2011
Cupertino-based Sobrato sells package of buildings in Bay Area for $80 million
Google leases new campus across Hwy. 101 in Mountain View
Mortgages: Feds push for clearer disclosures on home loan applications
Construction of new homes plummeted in April

economy," Frank Nothaft, the home loan giant's chief economist and vice president, said in a news release.

Existing-home sales: Nationwide, they were down in April -- both from the month before and a year earlier, the National Association of Realtors reported. (That reflects trends for Silicon Valley and the rest of California that were reported earlier this week.)

Seasonally adjusted, the number of completed transactions last month in the U.S. dropped 0.8 percent from March. Sales were down 12.9 percent from April 2010, when the real estate market benefited from tax credits for many homebuyers.

"Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger," Lawrence Yun, the group's chief economist, said in a news release. "Unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations."

Distressed homes: In the Golden State, foreclosure properties and short sales (for prices less than the value of a mortgage on a home) represented 48 percent of the market last month, the California Association of Realtors reported today.

While that number is still relatively high, it's down from 51 percent in March and 49 percent in April 2010.

"The share of sales of non-distressed properties increased during April, as bargain hunters and investors were joined by homebuyers who are timing their buying decisions to coincide with the start of the spring homebuying season," Beth L. Peerce, the association's president, said in a news release.

More tech headlines

Amazon: Less than four years after the Seattle online retail giant introduced the Kindle e-reader, it's now selling more books in electronic than physical formats.

"We had high hopes that this would happen eventually, but we never imagined it would happen this quickly," Amazon founder and CEO Jeff Bezos said in a news release today.

Since April 1, according to the news release, Amazon has sold 105 Kindle books for every 100 hardcover and paperback books. Amazon said it isn't including free Kindle books in those numbers.

Comcast: The cable-TV and entertainment-industry giant has apologized to a Seattle nonprofit for threatening to cut off its funding.

According to AP, Reel Grrls -- which offers film production classes to teenage girls -- had sent a Twitter post criticizing Comcast's hiring of Attwell Baker, a former member of the Federal Communications Commission, after the FCC had voted to approve the cable giant's deal to take control of NBC Universal.

After the post, a Comcast executive in Seattle said he couldn't continue to ask for funding for the group. "We sincerely apologize for the unauthorized action of our employee," a Comcast statement said, according to AP.

Silicon Valley tech stocks

Up: Apple (AAPL), Oracle (ORCL), Google (GOOG), Cisco Systems (CSCO), eBay (EBAY), VMware, Yahoo (YHOO).

Down: Intel, Hewlett-Packard (HPQ), Gilead Sciences (GILD).

Shares of Intel -- the Santa Clara chip behemoth that makes the processors that are the brains in most of our Mac and Windows computers -- and other semiconductor stocks fell today. According to Bloomberg News, Goldman Sachs cut its ratings on Intel and Silicon Valley chip-manufacturing equipment makers KLA-Tencor and Applied Materials. Intel dropped 34 cents, or 1.4 percent, to $23.54. KLA fell $1.62, or 3.8 percent, to $41.21. Applied declined 17 cents, or 1.2 percent, to $14.33.

The tech-heavy Nasdaq composite index: Up 8.31, or 0.3 percent, to 2,823.31.

The blue chip Dow Jones industrial average: Up 45.14, or 0.4 percent, to 12,605.32.

And the widely watched Standard & Poor's 500 index: Up 2.92, or 0.2 percent, to 1,343.60.

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