LinkedIn Stocks Seem Immune to Danger

Story first appeared on CNBC.

After a day of rumors and investigations, LinkedIn has formally acknowledged that some of its users passwords have been compromised.

This is the worst privacy and security news to slam the business networking service yet.

The company apologized and encouraged “best practices” to update passwords.

This is no small deal: by some reports it impacted over six million passwords, about 4 percent of LinkedIn’s users. But still, LinkedIn’s stock has been remarkably robust. At one point today it sank about 1.2 percent, but it closed the day up 9 cents, and it’s up nearly 50 percent year-to-date. Today not a single analyst issued a note in response to the news or changed a rating or stock target.

So why is the stock immune to a hack attack?

LinkedIn’s built a strong reputation on these matters. The great efforts LinkedIn has made to stay out of the spotlight on security and privacy concerns seems to have paid off. The company hasn’t drawn the outrage and concerns that Facebook has when it comes to privacy issues. This is partly due to LinkedIn’s focus on business, rather than the personal photos and details people share on Facebook. By its very nature of enabling people to share their professional profiles, there is simply less risk.

A number of Wall Street analysts say that they do not expect this news to at all impact LinkedIn usage. Why? These hack attacks and the need to change passwords are perceived as a cost of doing business in today’s digital world. As long as no one gets hurt, as one analyst put it, it’s not a big deal.

Perhaps most interesting, today’s hacking news follows media storm over LinkedIn’s mobile app violating personal privacy by improperly downloading and sharing personal details from users calendars, including conference call dial-ins and private notes. Users complained about the mobile app, and LinkedIn responded by changing its policy—it no longer downloads or shares the notes section of appointment reminders. When this news came out, the stock barely moved—ending the day less than a percentage point.

The company plans to update its privacy policy to give users more control sometime in the next few days.  We’ll hear when LinkedIn does its next quarterly report if there’s been any impact on LinkedIn traffic. But Wall Street certainly thinks that users will take today’s news in stride; they’ll change their password and perhaps click on through to connect with the service.

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Yahoo Discusses Selling Stake in Alibaba Again

Alibaba Group Holding Ltd. is near an agreement to buy back a 20 percent stake in itself from Yahoo! Inc. for about $7 billion and may announce a deal as soon as today, said a person with knowledge of the matter.

The purchase may pave the way for Alibaba, China’s largest e-commerce provider, to pursue an initial public offering in the next 18 months. Alibaba, helped by shareholders Temasek Holdings Pte., Digital Sky Technologies, Silver Lake, plans to finance the purchase with cash and debt.

Alibaba has been trying to buy back the stake in itself for more than a year and stepped up efforts in September, when the U.S. company fired former chief executive officer. Reducing the Alibaba stake lessens Yahoo’s toehold in China, the world’s largest Internet market, while also making a takeover of the U.S. company more likely, said an analyst at Stifel Nicolaus & Co.

For Yahoo shareholders, the sale and subsequent march towards an IPO is a clear positive, as many questioned whether Yahoo would be able to monetize its China assets at all. In addition, the capital required to take Yahoo private is reduced with each Alibaba monetization event.

Yahoo has come close to selling the stake in the past and failed, and a deal may be postponed. Yahoo currently owns a 40 percent stake in Alibaba so the current proposal under discussion would cut that holding in half.

The companies struggled to make headway on negotiations, failing to reach an agreement to let Alibaba Group buy back shares in 2010. Yahoo acquired the stake in 2005 in exchange for $1 billion and ownership of Yahoo’s Chinese unit.

Fissures became public by January 2010 when Alibaba Group described as “reckless‘‘ Yahoo’s support for Google Inc., which tangled with Chinese authorities over the nation’s Web- censorship rules.

In May of last year, Yahoo’s rift with Alibaba widened after the Web portal said the Chinese company spun off its online payment business without informing shareholders. Yahoo said it wasn’t consulted about the transfer of the Alipay unit to a company mostly owned by the chief executive officer of Alibaba Group.

Yahoo had a board meeting to review the transaction and will consider a dividend payment, AllThingsD reported May 17. The website said the deal is likely to value the portion of Yahoo’s holdings at about $7 billion, or 20 percent of Alibaba’s $35 billion enterprise valuation. After a potential IPO, Yahoo could sell more of its stake, AllThingsD reported.

Active Discussions

Yahoo, which failed to keep pace with growth at Google and Facebook Inc., is pursuing active discussions with the Chinese company.

Yahoo had also been in discussions about selling its stake in Yahoo! Japan to Tokyo-based Softbank Corp. Those talks have gone cold over price and have not resumed.

Yahoo considered a deal with Alibaba and Softbank that would cut its stake in Alibaba to about 15 percent from about 40 percent.

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Facebook Looks Bad As Stocks Fall Below IPO Offering

Story first appeared in USA Today.

Facebook lost a little more face Monday, as its stock fell below its IPO price and forced traders to start focusing on problems not possibilities.

Shares of the world's No. 1 social-networking site dropped below the $38-a-share offering price, a financial fat lip more typical of marginal companies or ones with unsteady financial performance.

At its depth, Facebook's shares fell to $33 a share, marking a 13% decline for even privileged investors who bought at the IPO price. Shares finished the day down $4.20, or 11%, to $34.03.

Seeing its IPO "break," as it's called on Wall Street, is embarrassing since the broad stock market jumped, with the Dow Jones industrial average adding 135 points to 12,504. Even more Facebook shares might be sold into the market in as soon as three months when select employees and other investors may sell their stock.

Facebook's disappointing debut is especially troubling as it:

•Showcases technology issues at the Nasdaq. Traders griped Friday they were not getting confirmations from the Nasdaq exchange indicating the status of orders, Ahmed says. Trading was reported as going smoothly on Monday.

•Underscores a sharp reversal for the IPO market. Just as the IPO market seemed on the upswing, Facebook punctuated a big reversal. Of 124 companies that went public the past 12 months, 50 are trading below their IPO prices, says a USA TODAY analysis of data from IPOScoop.com.

•Serves up another confidence killer for investors. Investors who bought Facebook stock got a big lesson on volatility. Facebook's botched debut comes as IPOs and the broad market have been weak. The FTSE Renaissance U.S. IPO index is up just 1.5% this year, and the Dow has fallen nearly 6% this month.

Facebook's stock woes don't directly hurt the company. Facebook must prove it can achieve the huge profitability bullish investors predicted.

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