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Underdisclosed (< 20)

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Latest LinkedIn Filing Demonstrates Again That The Future Is Mobile

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August 20, 2013 – Comments (2) | RELATED TICKERS: LNKD

LinkedIn recently filed its June 30 Form 10-Q.  We did not find too many earth-shattering revelations in the filing, but one thing caught our eye.  In its risk factor relating to mobile devices, LinkedIn is now discussing the launch of its products as occurring in the past, rather than pending launches of new products.  We will continue to monitor LinkedIn’s performance and the direct effect of mobile devices on its business.

Why is this a big deal?  A recurring theme here at Underdisclosed HQ has been the movement from the desktop to the mobile device.  Or, as we put it, the future is mobile.  A company’s ability to “monetize” or “drive eyeballs” or do other jargon-ey things will depend on how it adapts to the switch from desktop to mobile.

This is not new to LinkedIn.  As it has acknowledged throughout its filings:

“Because access to online services through mobile devices is growing, our members are increasingly accessing LinkedIn on mobile devices. . . [W]e have seen substantial growth in mobile usage, and we anticipate that the rate of growth in mobile usage will continue to grow. Advertising is a source of revenue for us, and it is not clear that we will be able find ways for our Marketing Solutions product to be effectively used on mobile devices.”

Historically, LinkedIn’s revenue has been derived from desktop users.  LinkedIn has not generated much revenue from mobile users and has been investing in mobile applications that have only recently been launched.

LinkedIn recognizes the issue and the risk, and has said:

If our members increasingly use mobile devices as a substitute for access to our online services as opposed to personal computers, and if we are unable to successfully implement monetization strategies for our solutions on mobile devices, if these strategies are not as successful as our offerings for personal computers, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.”

If?

It is happening, and it is changing how desktop-focused websites are doing business.  If they don’t change with the market, the market will take their revenues.  In fact, we’ll let LinkedIn explain:

“Further, as users increasingly access our services through mobile devices, we are becoming more dependent on the distribution of our mobile applications through third parties, and we may not be able to access their application program interfaces or be able to distribute our applications, and this may also impact our ability to monetize our mobile products.”

2 Comments – Post Your Own

#1) On August 20, 2013 at 9:13 PM, spinonefool (< 20) wrote:

And in the face of LNKD's own statements about doubts as to whether it can harness mobile access for profit, the stock price keeps going up?  What if FB or Z said that?  And now they are adding a focus on students - the most mobile generation.

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#2) On August 21, 2013 at 5:31 PM, Underdisclosed (< 20) wrote:

Thanks for the comment.

FB has said it in the past and was having serious issues with it until its most recent quarter.  I continue to believe that the move from desktop to mobile is currently the biggest disruption to providers of online services, particularly those with advertising-based business models.  Established companies are all trying to come to grips with this and finally recognize it.  A couple of years ago, everyone assumed that the future was 'social,' but it turned out to be 'mobile.'

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