LinkedIn says China blocking Website constitutes new risk to potential investor-Bloomberg

LinkedIn Corp., the largest professional networking portal, said the possibility that China can bar access to its Web site constitutes a new risk for investors in its initial public offering. Photographer: David Paul Morris/Bloomberg

LinkedIn Corp., the largest professional networking portal, said the possibility that China can bar access to its Web site constitutes a new risk for investors in its initial public offering.

A block of China is among the circumstances under which "the value of our network could be negatively affected," said LinkedIn in an updated prospectus filed March 11. The company's Jan. 27 offers document contained no such reference to China.

"The Government of the people's Republic of China recently blocked access to our Web site in China in a short period of time," said the latest the date of the application. "We can assure that the Chinese Government does not want to block access to one or more of our functions and products, or our entire site in China for a longer period of time or permanently."

Linkedins service was interrupted in China for more than 24 hours Feb 24-25 after the user postings supported calls for protests in the Asian nation. China, the world's largest Internet market with 457 million internet users, banning pornography, gambling and content critical of the ruling Communist Party. The blocks already sites run by Facebook Inc., Twitter Inc. and Google Inc., YouTube.

"It would be difficult to commit to the absence of the politically sensitive messages from users of the platform unless LinkedIn would be willing to monitor and censor user posts," said Andrey Glukhov, a New York-based Internet analyst at Brean Murray Carret and company.in an e-mail today.

Discussion Group

On Feb 23, LinkedIn user is identified as "Jasmine Z" set discussion group "vote" on the site Jasmine to discuss pro-democracy protests in the Middle East and their relevance for China. Jasmine z said he "die for democracy, freedom and justice in my country."

These postings have since been deleted. Today, LinkedIn features on the site is still a group called "I support Jasmine Revolution in China," which has three members and no transactions.

LinkedIn, based in Mountain View, California, seeks an IPO to raise as much as $ 175 million in what will probably be the first public offering of a large U.S. social networking site. The company hired Morgan Stanley, Bank of America Corp. and JPMorgan Chase and company lead sales.

LinkedIn more than double sales to 243 million dollars in 2010, from $ 120 million the previous year, according to the filing. The company had net profit of $ 15.4 million, compared with a loss of $ 4 million for the year-ago period.

The company, which has more than 90 million users, said 27 percent of sales last year were from outside the United States Submission did not contain the number of users in China.

LinkedIn is now available in six languages: English, French, German, Italian, Portuguese, and Spanish. Members can also create profiles of up to 41 languages, including Chinese, said Shannon Stubo, a company spokeswoman, in a Feb. 23 e-mail.

The question of whether into the China market is "complicated and not something we take lightly," Stubo said at the time. She could not be reached via phone or email today.

"We have a program of local languages to initiate the process, which is in line with our global growth," said Stubo in e-mail last month. "We are focused on getting it right. We keep an eye on China and Linkedins growth in the country. "

Even without a local site, the company has made progress with Chinese companies, including Huawei Technologies co., the nation's largest maker of equipment for mobile phone networks. Huawei had 15 jobs posted on LinkedIn today, and there were more than 17,080 users on the site registered as Huawei employees. That equals about 16 percent of the company's total of 110,000 workers.

LinkedIn does not currently have commercial activities in China, said there will not be an immediate financial impact, if the service was blocked, Bill Bishop, the Beijing-based independent media consultant. The question can still raise investor concern for its future potential, he said.

"It is never good to be blocked from the largest market in the world," Bishop said. "Investors may start taking some of the default text on legislative risk as more than just the default text."

Contact the person responsible for this story editor: young-Sam Cho by ycho2@bloomberg.net

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