LinkedIn sees a large rise in profits

LinkedIn, the social networking site for 'professionals', has seen a 10% rise in profits for the last quarter of 2012. This has led to an increase in its share price.

LinkedIn is a social networking website for people in professional occupations that was launched in 2003. As of January 2013, LinkedIn reported that it had more than 200 million registered users in more than 200 countries and territories. LinkedIn was founded by former employees of the payment processing system PayPal in 2002. The company filed for an initial public offering in January 2011 and traded its first shares on May 19, 2011, under the NYSE symbol "LNKD". This public flotation appears to have been a success according to a report by the BBC. The profits for the fourth quarter were $40.2 million, which represented a 10% rise on the preceding quarter. The news, the Wall Street Journal reports, sent shares up nearly 10% to $136.30 in after-hours trading on February 7. Part of LinkedIn's profit success, Business Insider indicates, is due to a very high "gross margin," meaning that it does not spend much to create and provide the content and its services that its users consume. Strategy Eye considers that the rise in profits has mainly come about through consultancies paying the LinkedIn to search for potential employees, using headhunting tactics.