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Sunday, August 5, 2012

Restoring unity at South China Sea

I DON’T usually pay attention to Asean meetings as there are so many of them but the disappointing outcome of the recently concluded Asean Ministers Meeting (AMM) in Phnom Penh caught my attention.

The failure of the meeting to come up with a joint communiqué was striking even to casual observers.

The failure, the first in the bloc’s 45-year history, caused by disagreement among Asean members over the South China Sea dispute, was a worrying development that has cast doubts over its ability to speak in unison on this thorny issue.

The last thing Asean needs is to be caught in a turf war for superpowers in its own backyard.

The South China Sea, which is so crucial not only to the littoral states but to the international community at large, could well be that stage.

China has been seen by many as acting “assertively” in backing its claim of the sea and has been involved in several stand-offs with Vietnam and the Philippines, which have also reacted strongly against China in those situations.

I wonder if Malaysia, as a claimant state, should start thinking of having in place specific contingency plans to confront the kinds of situation that Vietnam and the Philippines have faced against China.

I know Malaysia enjoys close bilateral and people-to-people relations with China. Beijing has even described us as a “special friend”.

Despite this, let us be reminded that China also has deep relations with Vietnam and the Philippines.

It even has nearly inextricable economic and strategic relations with the United States, a potential adversary and with whom it has clashing interests in the sea.

I am not schooled in the fine art of international relations but I believe nations should not always think the best of others and must be prepared to face any eventuality.

In the context of the South China Sea, such eventualities should include facing potentially hostile and intrusive acts of our neighbours which can undermine our interests.

Any one of the claimant states can turn adversarial but I believe we have to pay special attention to China.

Its recent actions such as patrolling disputed waters and deploying a garrison at Sansha city to impose its jurisdiction all point towards Beijing’s readiness and resolve to assert its claims.

What would Malaysia do should we find the cables of our offshore exploration vessels cut by a Chinese vessel or if Chinese surveillance and patrol vessels appear in our Exclusive Economic Zone (EEZ), situations which Vietnam and the Philippines have faced?

I believe Malaysia should prepare contingency plans to face such situations. Merely reacting to developments in this high-stake theatre would not be good enough.

The tense situation underscores the need for a binding code to govern the behaviour of the claimants.
Such a code will compel them to settle their disputes through peaceful means and using international law.

While I noticed progress between Asean and China to come up with guidelines for the Declaration of Conduct in the sea between them, they still have a long way to go before they can agree on a Code of Conduct.

On the outcome of the AMM meeting in Phnom Penh and China’s refusal to discuss disputes multilaterally, I foresee a prolonged impasse. At the rate things are going, I don’t see China changing tangent of not wanting to discuss the dispute multilaterally.

The Code of Conduct that Asean and China are working to establish would not be efficient if it did not include all the claimants. In this regard, one wonders if it would make sense to include Taiwan, which is also a claimant in the sea, to be a party to such a code.

It would not make sense to ignore this claimant in the construct of a code to govern the conduct of claimant states. What set of conduct then would Taiwan be subjected to if the Code of Conduct is agreed only between Asean and China?

Besides ensuring that everyone plays by the same rules, bringing Taiwan into the fold could help yield fresh perspectives to the discourse on disputes at sea, which to me seems to be getting nowhere.

Taiwan has much to offer in areas such as marine scientific research, fishery management/conservation, environmental protection, humanitarian assistance/disaster relief, and search and rescue.

The claimant and littoral states could tap into Taiwan’s expertise in these areas and promote cooperation, build confidence and avert further tension.

I hope my take on the subject would provide food for thought to claimant states and prompt them to set aside differences and work together towards peace.

I believe Malaysia as a claimant state should not only be steadfast in safeguarding its interests but should also show initiative to promote peace.

Malaysia can leverage its position as a founding member of Asean and as a friend to claimant states and the United States to be a voice of reason.

With the statesmanship skills of our diplomats we can help restore unity in Asean that was shaken in the aftermath of the AMM in Phnom Penh, restore confidence between Asean and China, and reassert Asean’s centrality in regional security matters.

SON OF THE SEA
Kuala Lumpur

China Pushes on the South China Sea, ASEAN Unity Collapses


Publication: China Brief Volume: 12 Issue: 15
August 3, 2012
China and ASEAN Much Further Apart than the Smiles Suggest

For more than two decades Beijing has pursued a consistent policy in the South China Sea composed of two main elements: gradually strengthening the country’s territorial and jurisdictional claims while at the same time endeavoring to assure Southeast Asian countries of its peaceful intentions. Recent moves by China to bolster its maritime claims have brought the first element into sharp relief, while reassurances of benign intent have, however, been in short supply. Indeed, far from assuaging Southeast Asian concerns regarding its assertive behavior, China has fuelled them by brazenly exploiting divisions within the Association of Southeast Asian Nations (ASEAN) to further its own national interests.

China Hardens Its Stance

Commentaries in China’s state-run media analyzing the South China Sea issue have become markedly less conciliatory. Opinion pieces highlight several new themes in China’s official line. One theme is that China’s territory, sovereignty as well as its maritime rights and interests increasingly are being challenged by Southeast Asian nations and Japan in the South and East China Seas. China’s response, it is argued, should be to uphold its claims more vigorously, increase its military presence in contested waters, and, if necessary, be prepared to implement coercive measures against other countries. As one commentary notes “Cooperation must be in good faith, competition must be strong, and confrontation must be resolute” (Caixin, July 13).

Another theme is that, while China has shown restraint, countries such as the Philippines and Vietnam have been pursuing provocative and illegal actions in a bid to “plunder” maritime resources such as hydrocarbons and fisheries which China regards as its own (China Daily, July 30).

A third theme is that Manila and Hanoi continue to encourage U.S. “meddling” in the South China Sea and that the United States uses the dispute as a pretext to “pivot” its military forces toward Asia (Global Times, July 11). To reverse these negative trends, Chinese commentators have urged the government to adopt more resolute measures toward disputed territories and maritime boundaries. Nationalist sentiment, they argue, demands no less.

Recent measures undertaken by the Chinese authorities do indeed suggest a more hard-line position. Ominously, some of the initiatives have included a strong military element, presumably as a warning to the other claimants that China is ready to play hardball.

Perhaps the most noteworthy attempt by China to bolster its jurisdictional claims in the South China Sea was the raising of the administrative status of Sansha from county to prefecture level in June. Sansha originally was established in 2007 as an administrative mechanism to “govern” the Paracel Islands, Macclesfield Bank and the Spratly Islands. Sansha’s elevation was an immediate response to a law passed on June 21  by Vietnam’s national assembly, which reiterated Hanoi’s sovereignty claims to the Paracels and Spratlys. Both Vietnam and China protested the other’s move as a violation of their sovereignty (Bloomberg, June 21). Less than a month later, Sansha’s municipal authorities elected a mayor and three deputy mayors and China’s Central Military Commission authorized the establishment of a garrison for “managing the city’s national defense mobilization, military reserves and carrying out military operations (Xinhua, July 20).

Earlier, in late June, China’s Defense Ministry announced it had begun “combat ready” patrols in the Spratly Islands to “protect national sovereignty and [China’s] security development interests” (Reuters, June 28). Embarrassingly for the People’s Liberation Army (PLA) Navy, however, on July 13, one of its frigates ran aground on Half Moon Shoal, 70 miles west of the Philippine island of Palawan and within the Philippines 200 nautical mile exclusive economic zone (EEZ). The frigate was refloated within 24 hours, suggesting that other PLA Navy vessels were nearby when the incident occurred. These developments provide further evidence of the growing militarization of the dispute.

China also has moved to undercut the claims and commercial activities of the Philippines and Vietnam in the South China Sea in other ways.

In June, the state-run China National Offshore Oil Corporation (CNOOC) invited foreign energy companies to bid for exploration rights in nine blocks in the South China Sea. The blocks lie completely within Vietnam’s EEZ and overlap with those offered for development to foreign energy corporations by state-owned PetroVietnam. Accordingly, Hanoi vigorously protested CNOOC’s tender (Bloomberg, June 27). More importantly the blocks are located at the edge of China’s nine-dash line map and seem to support the argument that Beijing interprets the dashes as representing the outermost limits of its “historic rights” in the South China Sea. Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), however, coastal states are not entitled to “historic rights” on the high seas. It is therefore unlikely that any of the major energy giants will bid for CNOOC’s blocks—although smaller companies may do so if only to curry favor with Beijing with a view to landing more lucrative contracts down the road. If, however, exploration does move forward in any of the nine blocks, a clash between Vietnamese and Chinese coast guard vessels will become a very real possibility.

On the issue of ownership of Scarborough Shoal, scene of a tense standoff between Chinese and Philippines fishery protection vessels in May-June, China position remains uncompromising. At the annual ASEAN Regional Forum (ARF) in Phnom Penh, Cambodia in July, Chinese Foreign Minister Yang Jiechi restated China’s sovereignty claims to the shoal, rejected the notion that it was disputed and accused Manila of “making trouble” (Xinhua, July 13). According to the Philippine foreign ministry, Chinese trawlers―protected by Chinese paramilitary vessels—continue to fish in waters close to Scarborough Shoal in contravention of a bilateral accord whereby both sides agreed to withdraw their vessels [1].

Following the ARF, China kept up the pressure on the Philippines. In mid-July, it dispatched a flotilla of 30 fishing trawlers to the Spratlys escorted by the 3,000-ton fisheries administration vessel Yuzheng 310 (Xinhua, July 15). The trawlers collected coral and fished near Philippine-controlled Pag-asa Island and Chinese-controlled Mischief and Subi Reefs (Philippine Daily Inquirer, July 27). The Philippine authorities monitored the situation but took no action.

The Phnom Penh Debacle

In the past, after China has undertaken assertive actions in the South China Sea it has tried to calm Southeast Asia’s jangled nerves. At the series of ASEAN-led meetings in Phnom Penh in mid-July, however, Chinese officials offered virtually no reassurances to their Southeast Asian counterparts. Worse still, China seems to have utilized its influence with Cambodia to scupper attempts by ASEAN to address the problem, causing a breakdown in ASEAN unity.

In the final stages of the annual meeting of ASEAN foreign ministers (known as the ASEAN Ministerial Meeting or AMM), the Philippines and Vietnam wanted the final communiqué to reflect their serious concerns regarding the Scarborough Shoal incident and the CNOOC tender. They were supported by Singapore, Indonesia, Malaysia and Thailand who felt that ASEAN should speak with one voice. Cambodia—which holds the rotating chairmanship of ASEAN and has close political and economic ties with China— objected because, in the words of Foreign Minister Hor Namhong, “ASEAN cannot be used as a tribunal for bilateral disputes” (Straits Times, July 22). Attempts by Indonesian Foreign Minister Marty Natalegawa to reach a compromise on the wording were unsuccessful and for the first time in its 45-year history the AMM did not issue a final communiqué.

The fallout from the AMM was immediate and ugly. Natalegawa labelled ASEAN’s failure to reach agreement “irresponsible” and that the organization’s centrality in the building of the regional security architecture had been put at risk (Straits Times, July 16). Singapore’s Foreign Minister, K. Shanmugam described the fiasco as a “sever dent” in ASEAN’s credibility (Straits Times, July 14). Cambodia and the Philippines blamed the failure on each other. Cambodia was pilloried by the regional press for its lack of leadership and for putting its bilateral relationship with China before the overall interests of ASEAN. One analyst alleged  Cambodian officials had consulted with their Chinese counterparts during the final stages of talks to reach an agreement on the communiqué [2]. China’s Global Times characterized the outcome of the AMM as a victory for China, which does not think ASEAN is an appropriate venue to discuss the dispute, and a defeat for the Philippines and Vietnam (Global Times, July 16).

A few days after the AMM, Indonesian President Susilo Bambang Yudhoyono dispatched his foreign minister to five Southeast Asian capitals in an effort to restore ASEAN unity. Natalegawa’s shuttle diplomacy resulted in an ASEAN foreign minister’s statement of July 20 on “ASEAN’s Six-Point Principles on the South China Sea” [3]. The six points, however, broke no new ground and merely reaffirmed ASEAN’s bottom line consensus on the South China Sea. In response to the joint statement, China’s Foreign Ministry said it would work with ASEAN to implement the 2002 Declaration on the Conduct of Parties in the South China Sea (DoC) (Chinese Ministry of Foreign Affairs, July 21).

One of the six points calls for the early conclusion of a code of conduct (CoC) for the South China Sea, but the Phnom Penh debacle has made that target highly doubtful.

Although China agreed to discuss a CoC with ASEAN in November 2011, Beijing always has been lukewarm about such an agreement, preferring instead to focus on implementing the DoC. Undeterred, earlier this year ASEAN began drawing up guiding principles for a code and in June agreed on a set of “proposed elements.” While much of the document is standard boiler plate, there are two aspects worthy of attention.

The first is that ASEAN calls for a “comprehensive and durable” settlement of the dispute, a phrase that seems to repudiate Deng Xiaoping’s proposal that the parties should shelve their sovereignty claims and jointly develop maritime resources. Clearly, the four ASEAN claimants have rejected Deng’s formula as it would be tantamount to recognizing China’s “indisputable sovereignty” over the South China Sea atolls.

The second interesting aspect concerns mechanisms for resolving disputes arising from violations or interpretations of the proposed code. The document suggests that disputing parties turn to the 1976 Treaty of Amity and Cooperation (TAC) or dispute resolution mechanisms in UNCLOS. Neither, however, would be of much utility. While the TAC does provide for a dispute resolution mechanism in the form of an ASEAN High Council, this clause has never been invoked due to the highly politicized nature of the High Council and the fact that it cannot issue binding rulings. Moreover, although China acceded to the TAC in 2003, Beijing almost certainly would oppose discussion of the South China Sea at the High Council because it would be outnumbered 10 to 1.

UNCLOS does provide for binding dispute resolution mechanisms, including the submission of disputes to the International Court of Justice (ICJ) or the International Tribunal on the Law of the Sea (ITLOS). China always has rejected a role for the ICJ in resolving the territorial disputes in the South China Sea and, in 2006, China exercised its right to opt out of ITLOS procedures concerning maritime boundary delimitation and military activities.

On July 9, Vice Foreign Minister Fu Ying had indicated to ASEAN foreign ministers that China was willing to start talks on a CoC in September. Two days later, however, as ASEAN wrangled over their final communiqué, Foreign Minister Yang seemed to rule this out when he stated discussions could only take place “when the time was ripe” (Straits Times, July 11). At present ASEAN and China are not scheduled to hold any meetings on the CoC, though officials currently are discussing joint cooperative projects under the DoC.

If and when the two sides do sit down to discuss the CoC, it is probable that Beijing will demand all reference to dispute resolution be removed on the grounds that the proposed code is designed to manage tensions only and that the dispute can only be resolved between China and each of the other claimants on a one-on-one basis. Taken together, these developments have dimmed seriously the prospect of China and ASEAN reaching agreement on a viable code of conduct for the South China Sea any time soon. As such, the status quo will continue for the foreseeable future. 

Notes:
  1. “Why There was no ASEAN Joint Communique,” Philippine Department of Foreign Affairs, July 19, 2012 http://www.dfa.gov.ph/main/index.php/newsroom/dfa-releases/5950-why-there-was-no-asean-joint-communique-.
  2. Ernest Bower, “China reveals its hand on ASEAN in Phnom Penh,” Center for Strategic and International Studies, July 20 2012.
  3. “Statement of ASEAN Foreign Ministers on ASEAN’s Six-Point Principles on the South China Sea,” Cambodian Ministry of Foreign Affairs, July 20, 2012 http://www.mfaic.gov.kh/mofa/default.aspx?id=3206.

LinkedIn is not Facebook: Earnings/Revenue Up 89%

LinkedIn once again proved it's not Facebook: The business networking site reported that sales nearly doubled from a year ago, led by a huge increase in revenue for its job posting services.

LinkedIn Earnings: Revenue Up 89% YoY
LinkedIn has released its Q2 earnings report. Revenue is up 89% year-over-year at $228.2 million. Net income, on the other hand, was down to $2.8 million for the quarter, from $4.5 million the same period last year. The company beat Wall Street expectations.

During the quarter, the company launched its iPad app, redesigned LinkedIn Today, released targeted status updates and follower stats to companies with active profiles, and completed the rollout of Talent Pipeline.
“LinkedIn had a strong second quarter with all of our key operating and financial metrics showing solid performance,” said CEO Jeff Weiner. “Our ongoing investment in product innovation drove healthy engagement as measured by unique visiting members and member page views, and our three revenue streams all experienced significant growth.”

Here’s the release in its entirety:

MOUNTAIN VIEW, Calif., Aug. 2, 2012 (GLOBE NEWSWIRE) – LinkedIn Corporation (NYSE:LNKD), the world’s largest professional network on the Internet, currently with more than 175 million members, reported its financial results for the second quarter ended June 30, 2012:
  • Revenue for the second quarter was $228.2 million, an increase of 89% compared to $121.0 million in the second quarter of 2011.
  • Net income for the second quarter was $2.8 million, compared to net income of $4.5 million for the second quarter of 2011. Non-GAAP net income for the second quarter was $18.1 million, compared to $10.8 million for the second quarter of 2011. Non-GAAP measures exclude tax-affected stock-based compensation expense and tax-affected amortization of acquired intangible assets.
  • Adjusted EBITDA for the second quarter was $50.4 million, or 22% of revenue, compared to $26.3 million for the second quarter of 2011, or 22% of revenue.
  • GAAP EPS for the second quarter was $0.03; Non-GAAP EPS for the second quarter was $0.16. 
“LinkedIn had a strong second quarter with all of our key operating and financial metrics showing solid performance,” said Jeff Weiner, CEO of LinkedIn. “Our ongoing investment in product innovation drove healthy engagement as measured by unique visiting members and member page views, and our three revenue streams all experienced significant growth.”

Second Quarter Financial Details and Operating Summary
  • Hiring Solutions: Revenue from Hiring Solutions products totaled $121.6 million, an increase of 107% compared to the second quarter of 2011. Hiring Solutions revenue represented 53% of total revenue in the second quarter of 2012, compared to 48% in the second quarter of 2011.
  • Marketing Solutions: Revenue from Marketing Solutions products totaled $63.1 million, an increase of 64% compared to the second quarter of 2011. Marketing Solutions revenue represented 28% of total revenue in the second quarter of 2012, compared to 32% in the second quarter of 2011.
  • Premium Subscriptions: Revenue from Premium Subscriptions products totaled $43.5 million, an increase of 82% compared to the second quarter of 2011. Premium Subscriptions represented 19% of total revenue in the second quarter of 2012, compared to 20% of revenue in the second quarter of 2011. 
Revenue from the U.S. totaled $147.3 million, and represented 65% of total revenue in the second quarter of 2012. Revenue from international markets totaled $81.0 million, and represented 35% of total revenue in the second quarter of 2012. 

Revenue from the field sales channel totaled $129.4 million, and represented 57% of total revenue in the second quarter of 2012. Revenue from the online, direct sales channel totaled $98.8 million, and represented 43% of total revenue in the second quarter of 2012.

GAAP net income for the second quarter was $2.8 million, compared to net income of $4.5 million for the second quarter of 2011. Non-GAAP net income for the second quarter was $18.1 million, compared to $10.8 million in the second quarter of 2011.

Adjusted EBITDA for the second quarter was $50.4 million, or 22% of revenue, compared to $26.3 million for the second quarter of 2011, or 22% of revenue.

GAAP EPS was $0.03 based on 112.3 million fully-diluted weighted shares outstanding compared to $0.04 for the second quarter of 2011 based on 103.1 million fully-diluted weighted shares outstanding.  Non-GAAP EPS was $0.16 based on 112.3 million fully-diluted weighted shares outstanding compared to $0.10 for the second quarter of 2011 based on 103.1 million fully-diluted weighted shares outstanding.

“Strong performance across our three product lines drove record levels of revenue and adjusted EBITDA,” said Steve Sordello, CFO of LinkedIn. ”As we continue to invest aggressively in technology, product, and our businesses, we remain focused on achieving our long-term goals.”

For additional information, please see the “Selected Company Metrics and Financials” page on LinkedIn’s Investor Relations site.

Second Quarter Highlights and Strategic Announcements

In the second quarter, LinkedIn:
  • Launched its first app designed for the iPad. The app was received positively, and engagement trends are encouraging as more than half of page views on the app are being generated by content-focused products such as updates, news and groups.  
  • Simplified the design of its flagship social news product LinkedIn Today and added deeper integration into the homepage. Engagement on LinkedIn Today is now up more than 150% since the introduction of these new features. 
  • Released Targeted Status Updates and Follower Statistics to all of the more than two million organizations on LinkedIn with active Company Profiles.
  • Completed the rollout of Talent Pipeline to the entire universe of LinkedIn Recruiter customers. In less than three months, Recruiter customers have already added more than one million prospective candidates into Talent Pipeline, enhancing their ability to quickly identify and hire new talent for their organizations.
Additionally, in July LinkedIn began rolling out a significant redesign to the homepage, enabling members to discover, share, and discuss the professional information that is most important to them. The redesign has begun to positively impact engagement metrics; for example, shares originating on LinkedIn, including status updates, are now at all-time highs.

Business Outlook

LinkedIn is providing guidance for the third quarter of 2012, and revising guidance upward for the full year of 2012 on revenue, adjusted EBITDA, and stock-based compensation, while narrowing the full-year outlook for depreciation and amortization. 
  • Q3 2012 Guidance: Revenue for the third quarter of 2012 is projected to range between $235 million to $240 million. The company expects adjusted EBITDA to range between $42 million and $45 million. The company expects stock-based compensation to range between $27 and $28 million and depreciation and amortization to range between $20 million and $22 million.
  • Full Year 2012 Guidance: The company has revised its expected revenue range upward to $915 million to $925 million from the prior range of $880 million to $900 million. The company has also revised upward its expected adjusted EBITDA range to $185 million to $190 million from the prior range of $170 million to $175 million. The company now expects stock-based compensation to range between $85 million and $95 million, while the range for depreciation and amortization is now $75 million to $80 million.
Quarterly Conference Call

LinkedIn will host a webcast/conference call to discuss its second quarter 2012 financial results and business outlook today at 2:00 p.m. Pacific Time. Jeff Weiner and Steve Sordello will host the webcast, which can be viewed on the investor relations section of the LinkedIn website 

at http://investors.linkedin.com/. This call will contain forward-looking statements and other material information regarding the company’s financial and operating results. Following completion of the call, a recorded replay of the webcast will be available on the website. For those without access to the Internet, a replay of the call will be available beginning at 5:00 p.m. Pacific Time on August 2, 2012 through August 9, 2012 at 9:00 p.m. Pacific Time. To listen to the telephone replay, call (855) 859-2056, access code 96053756.

Upcoming Event

Management will participate in upcoming financial Q&A discussions at an investment industry event on September 6th. LinkedIn will furnish a link to this event on its investor relations website, http://investors.linkedin.com/ for both the live and archived webcasts.

About LinkedIn 
Founded in 2003, LinkedIn connects the world’s professionals to make them more productive and successful. With more than 175 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network on the Internet. The company has a diversified business model with revenue coming from member subscriptions, marketing solutions and hiring solutions. Headquartered in Silicon Valley, LinkedIn also has offices across the Americas, Europe, and the Asia-Pacific. 

The LinkedIn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11096

Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the company uses the following non-GAAP financial measures: adjusted EBITDA, non-GAAP net income, and non-GAAP EPS (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. 

The company excludes the following items from one or more of its non-GAAP measures:
Stock-based compensation. The company excludes stock-based compensation because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. The company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to competitors’ operating results.

Amortization of acquired intangible assets. The company excludes amortization of acquired intangible assets because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from various non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors’ operating results. 

Income tax effect of non-GAAP adjustments. The company adjusts non-GAAP net income by including the income tax effects of excluding stock-based compensation and the amortization of acquired intangible assets.  The company believes that the inclusion of the income tax effects provides additional transparency to the overall or “after tax” effects of excluding these items from non-GAAP net income.

For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to non-GAAP Financial Measures” table in this press release.  This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. Additionally, the company has not reconciled adjusted EBITDA guidance to net income guidance because it does not provide guidance for either other income (expense), net, or provision for income taxes, which are reconciling items between net income and adjusted EBITDA. As items that impact net income are out of the company’s control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort.

 Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about our products, including our planned investments in key strategic areas, certain non-financial metrics, such as member growth and engagement, and our expected financial metrics such as revenue, adjusted EBITDA, depreciation and amortization and stock-based compensation for the third quarter of 2012 and the full fiscal year 2012. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions.  If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include – but are not limited to – risks associated with: the company’s limited operating history in a new and unproven market; engagement of our members; the price volatility of our Class A common stock; general economic conditions; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to acquisitions of other companies; expectations regarding the company’s ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that its website is accessible at all times with short or no perceptible load times; security measures and the risk that the company’s website may be subject to attacks that degrade or deny the ability of members to access the company’s solutions or that our security measures may not be sufficient to prevent unauthorized access to our member data; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; our ability to accurately track our key metrics internally; members and customers curtailing or ceasing to use the company’s solutions; the company’s core value of putting members first, which may conflict with the short-term interests of the business; privacy, litigation and regulatory issues; increasing competition; our ability to manage our growth and retain our employees; the application of US and international tax laws on our tax structure and any changes to such tax laws; and the dual class structure of the company’s common stock.

Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K that was filed for the year ended December 31, 2011, and additional information will also be set forth in our Form 10-Q that will be filed for the quarter ended June 30, 2012, which should read in conjunction with these financial results.  These documents are available on the SEC Filings section of the Investor Information section of the company’s website at http://investors.linkedin.com/.  All information provided in this release and in the attachments is as of August 2, 2012, and LinkedIn undertakes no duty to update this information.

LINKEDIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

June 30,  December 31, 
2012 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents  $ 286,376  $ 339,048
Short-term investments  330,761  238,456
Accounts receivable (net of allowance for doubtful accounts of $3,516 and $5,460 at June 30, 2012 and December 31, 2011, respectively)  136,536  111,372
Deferred commissions  15,715  13,594
Prepaid expenses   20,923  10,799
Other current assets  21,601  12,658
Total current assets  811,912  725,927
Property and equipment, net  152,448  114,850
Goodwill  113,268  12,249
Intangible assets, net  33,456  8,095
Other assets  28,078  12,576
TOTAL ASSETS  $ 1,139,162  $ 873,697





LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable  $ 44,195  $ 28,217
Accrued liabilities  63,662  58,644
Deferred revenue  191,993  139,798
Total current liabilities  299,850  226,659
DEFERRED TAX LIABILITIES  40,612  18,551
OTHER LONG TERM LIABILITIES  15,525  3,508
Total liabilities  355,987  248,718
COMMITMENTS AND CONTINGENCIES 




STOCKHOLDERS’ EQUITY: 

Class A and Class B common stock  11  10
Additional paid-in capital  767,995  617,629
Accumulated other comprehensive income   129  100
Accumulated earnings   15,040  7,240
Total stockholders’ equity  783,175  624,979



TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $ 1,139,162  $ 873,697

LINKEDIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended

June 30,  June 30, 
2012 2011 2012 2011
Net revenue  $ 228,207   $ 121,040   $ 416,663   $ 214,972 





Costs and expenses:



Cost of revenue (exclusive of depreciation and amortization shown separately below)  30,367   18,403   55,500   35,186 
Sales and marketing  75,740   36,019   141,624   65,380 
Product development  60,080   30,414   107,173   55,149 
General and administrative  30,974   16,673   55,828   30,287 
Depreciation and amortization  17,548   9,602   32,430   17,761 
Total costs and expenses  214,709   111,111   392,555   203,763 





Income from operations  13,498   9,929   24,108   11,209 





Other income (expense), net  (668)  11   (444)  460 
Income before income taxes  12,830   9,940   23,664   11,669 
Provision for income taxes  10,019   5,427   15,864   5,078 
Net income   $ 2,811   $ 4,513   $ 7,800   $ 6,591 





Net income per share of common stock:



Basic  $ 0.03   $ 0.07   $ 0.08   $ 0.12 
Diluted  $ 0.03   $ 0.04   $ 0.07   $ 0.07 





Weighted-average shares used to compute net  income per share:



Basic  104,185  69,395  103,198  56,631
Diluted  112,317  103,129  111,813  100,131

LINKEDIN CORPORATION
SUPPLEMENTAL REVENUE INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended

June 30,  June 30, 
2012 2011 2012 2011
Revenue by product:
Hiring Solutions  $ 121,592  $ 58,620  $ 224,152  $ 104,953
Marketing Solutions  63,105  38,570  111,055  66,253
Premium Subscriptions  43,510  23,850  81,456  43,766
Total  $ 228,207  $ 121,040  $ 416,663  $ 214,972

Revenue by geographic region:
United States  $ 147,253  $ 82,739  $ 268,102  $ 147,859
Other Americas (1)  15,047  6,146  27,056  10,745
Total Americas  162,300  88,885  295,158  158,604
EMEA (2)  50,057  25,859  92,902  45,590
APAC (3)  15,850  6,296  28,603  10,778
Total  $ 228,207  $ 121,040  $ 416,663  $ 214,972

Revenue by channel:
Field sales  $ 129,448  $ 66,699  $ 230,919  $ 117,327
Online sales  98,759  54,341  185,744  97,645
Total  $ 228,207  $ 121,040  $ 416,663  $ 214,972






(1) Canada, Latin America and South America
(2) Europe, the Middle East and Africa (“EMEA”)
(3) Asia-Pacific (“APAC”)






LINKEDIN CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,
2012 2011 2012 2011


Non-GAAP net income and net income per share:

GAAP net income   $ 2,811  $ 4,513  $ 7,800  $ 6,591
Add back: stock-based compensation  19,323  6,815  31,949  10,658
Add back: amortization of intangible assets  1,851  862  3,159  1,671
Income tax effect of non-GAAP adjustments  (5,933)  (1,414)  (7,923)  (2,392)
NON-GAAP NET INCOME  $ 18,052  $ 10,776  $ 34,985  $ 16,528



GAAP DILUTED SHARES  112,317  103,129  111,813  100,131




NON-GAAP DILUTED NET INCOME PER SHARE  $ 0.16  $ 0.10  $ 0.31  $ 0.17





Adjusted EBITDA:

Net income  $ 2,811  $ 4,513  $ 7,800  $ 6,591
Provision for income taxes  10,019  5,427  15,864  5,078
Other (income) expense, net  668  (11)  444  (460)
Depreciation and amortization  17,548  9,602  32,430  17,761
Stock-based compensation  19,323  6,815  31,949  10,658
ADJUSTED EBITDA

By

Saturday, August 4, 2012

Zuckerberg Falls From Tech’s Wealthiest as Facebook Falters

Facebook Inc. (FB) co-founder Mark Zuckerberg is no longer among the world’s 10 richest technology billionaires.

The 28-year-old’s fortune dropped by $423 million yesterday as shares of the world’s largest social media company fell 4 percent to $20.04 in New York, a record low. Zuckerberg is now worth $10.2 billion. He is about $400 million behind James Goodnight, the co-founder of Cary, North Carolina-based software maker SAS Institute Inc., who now ranks as technology’s 10th- richest person, according to the Bloomberg Billionaires Index.

Mark Zuckerberg, chief executive officer and founder of Facebook Inc. Photographer: David Paul Morris/Bloomberg 

“From an emotional standpoint, he might care,” said Ron Florance, managing director of investment strategy for Wells Fargo Private Bank, in a telephone interview from Winston-Salem, North Carolina. “He’s much more worried about maintaining Facebook’s market share in the social media space than the day- to-day valuation swings of his company stock. He’s not worried about going broke.”

Facebook shares have fallen 47 percent from their initial public offering price of $38. The Menlo Park, California-based company last week reported earnings that showed slowing revenue growth.

Larry Yu, a company spokesman, didn’t respond to a phone call requesting comment.

Country Club

Zuckerberg’s fortune is based on his ownership of 503.6 million shares of Facebook, including 60 million options that have an exercise price of 6 cents a share. He also has about $150 million in cash and other liquid assets.

Goodnight, 69, co-founded SAS in 1976, and is worth $10.6 billion. The company is the world’s largest closely held software maker and generated revenue of $2.7 billion in 2011, up 12 percent in a year.

SAS is valued at $15.8 billion, according to data compiled by Bloomberg. The valuation is based on the average enterprise value-to-earnings before interest, tax, depreciation and amortization multiple of five publicly traded peers. A premium has been applied, based on recent transactions in the software industry.

Goodnight, who holds two-thirds of SAS, also co-owns the Prestonwood Country Club in Cary, North Carolina, and has collected dividend payments over more than three decades.

Microsoft Corp. (MSFT) co-founder Bill Gates is the richest technology billionaire in the world with a net worth of $61.6 billion, according to the index.

Bloomberg

Look, man threw dog into manhole!

Scores vent anger at Somali dog killer

PETALING JAYA: Scores of people are lodging police reports against a Somali student and his friends who killed a dog by throwing it into a manhole recently.

The student had been taking care of the dog named Kanilla while its 19-year-old Jordanian owner was away on a month's holiday at his home country.

People were further infuriated after watching a recording of the incident on YouTube which shows the perpetrators running away laughing after throwing the dog into the manhole.

The video has since been removed.

Lawyer C. H Tan, who lodged his report at the Bukit Jelutong police station on Wednesday evening with three others, said he was livid over what had happened.

“When I see acts of cruelty perpetrated against animals, I feel a dire and almost desperate need for justice to be dispensed against the perpetrators,” said Tan.

“Even worse was that the entirety of the deranged act was captured on video as some sick memorial,” he said.

The mass police reports were initiated by canine welfare project Malaysian Dogs Deserve Better (MDDB).

MDDB rescue coordinator Irene Low urged the public to lodge more police reports to express their disdain over what had happened.

“MDDB has provided a sample to be copied and pasted when lodging police reports on our Facebook page http://www.facebook.com/MalaysianDogsDeserveBetter,'' said Low.

Angry animal lovers also bombarded the Facebook page of the university, in which the Somali is believed to be a student, with comments.

A former student Colin Kuan urged the establishment to pay heed to what had happened.

Business owner Nortanti Latip urged the university to hand the perpetrators to the police and ensure they are sent back to their country of origin.

Meanwhile, a friend of the perpetrator said he believed the Somali student and others involved in the incident had been drinking.

He also said the perpetrator was very frightened and was in hiding.

“The news is everywhere with so many people angry at him,'' he added  - The Star/Asia News Network

 Related post:
How low can cruel people go?

Friday, August 3, 2012

Malaysian too distracted to be patriotic?

It may be the National Day month but most people are more preoccupied with the upcoming general election.

EVERY August, many of us look forward to the entire nation being awash with feelings of warmth and patriotism as we celebrate our National Day on the last day of the month.

Aug 31 was, until 2010, celebrated as the National Day as it was the day Malaya gained its independence from the British colonial masters, but this caused many Sabahans and Sarawakians to feel left out because their independence did not come until Sept 16, 1963.

Thus, the Government from 2010 declared that Sept 16 would also be a national holiday as it was the day Malaysia was formed – a move many Malaysians on the Borneo side of the country felt was long overdue.

So instead of a one-day National Day celebration, we now have a month-long one from Aug 16 to Sept 16. During this time Malaysians are encouraged to fly the Jalur Gemilang.

This is something that I have been doing regularly even before the call from politicians because I am a very patriotic Malaysian and unlike others I only declare myself as a Malaysian and nothing else.

However, this year I find it very difficult to bring myself to fly the flag. The amount of quarrelling and finger pointing that is going on at the moment makes it very bitter to express my patriotism.

Yes, there will be many of you who will say that the finger pointing and political posturing that’s going on at the moment are also a show of nationalism.

I do not disagree that being politically partisan is part of our democratic process but I cannot help but feel that the political temperature has gone too high for anyone to show his or her loyalty and love for the country.

From the way every act connected with the celebrations of Aug 31 and Sept 16 have been criticised and attacked on the Internet, any neutral but patriotic Malaysian will question themselves if they are being nationalistic or bias towards one side.

The way the criticisms flew when a certain logo was suggested for this 55th celebrations left many quarters stunned. It’s only a logo but yet the venom with which the attack was carried out was frightening.

Would the act of flying the Jalur Gemilang be mistaken as a symbol of support for one side or the other?

Yes, the way the Government had planned the National Day celebrations may not have been very bi-partisan with most of the programmes seemingly be centred around the achievements of the Government of the day.

Yes, the so-called 55th Merdeka song “Janji ditepati” reads like a roll call to the achievements of the Barisan Nasonal government.

But that’s what all the other 54th celebration songs, logos and themes were about – singing praises of such achievements and the 55th anniversary celebration plans are not very different.

The difference, I feel, is the heightened tension in the country stoked by the high expectation of an impending general election.

People are now too busy guessing when the general election will be held to be bothered about anything else.

Recently, there was a rumour that it would be held in September because “someone told someone” but according to the same media a few days later, it has again been “postponed” to November it seems.

Why? Because two Sabahan Barisan Nasional politicians had left their party positions to co-operate with Pakatan Rakyat.

The “jumping” of the two had been expected for over two months.

Nothing done these days is not seen to be connected to the GE 13. It does not matter whether it is the shortage of water or the call for the protection of certain environmentally sensitive places.

The problem is that politicians have been quick to jump on the bandwagon to use these issues to attack their opponents and instead of these matters being resolved, they get muddied by politics.

Politicians, regardless which side of the divide they are from, are extra sensitive during this run up to the general election. Every statement, newspaper report or social media comment which they deem as not favourable to them as made by people with an agenda against them.

Even supposed defenders of press freedom want to gag the media in case their reports do not favour their side.

The country is highly charged. Recently, it was reported that an elderly couple in Pasir Emas, Kelantan was divorcing after 14 years of marriage, the husband allegedly could no longer convince his wife to join his political party.

The 78-year-old man reportedly accused his 61-year-old religious teacher ex-wife of deviating from Islam for not supporting his party. The wife was supposed to have supported Umno while the husband was an ardent follower of PAS.

If political differences can destroy a marriage then what chance has our National Day celebrations got?

As it is, I am the only person in my multi-racial neighbourhood who bothers to fly the Jalur Gemilang come every August. I put this down to the apathy of my neighbours and the lack of patriotism due to ignorance.

They do not realise that the expression of patriotism by flying the flag is the best way to show that we are Malaysians and that nothing can take that away from us regardless of our religious or cultural backgrounds.

WHY NOT? BY WONG SAI WAN
saiwan@thestar.com.my

> Executive Editor Wong Sai Wan will not bother to dig out the old Jalur Gemilang this year – he will go buy a new one – regardless if it’s the silly election season.

How low can cruel people go?

Somali who ‘helped’ to care for pet throws it into manhole

PETALING JAYA: The deliberate killing of a pet dog by two men who were caught on video throwing it into a manhole has raised the hackles of animal lovers.

Worse, the persons who killed the dog had earlier volunteered to care for the pet, claims the owner, a Jordanian student.

“I went back to Jordan on June 24. My housemate's friend, a Somali student, offered to care for my dog Kanilla for a month,” said the 19-year-old, adding that the female dog was a cross between a Pitt Bull and a Dalmatian.


On July 19, the owner was shocked when he received a message from the Somali student claiming that Kanilla had run away.

Further distress awaited the owner when he came back to Malaysia on July 26.

“My housemate showed me a video of the Somali student and another person throwing Kanilla into a manhole in Cyberjaya,'' he said.

He said he was broken-hearted over the cruelty inflicted upon Kanilla.

Cruelty comes in many forms but this is particularly very shocking. I urge the authorities to take the necessary action and to make a stand that animal abuse would not be tolerated in Malaysia. — CHRISTINE CHINCruelty comes in many forms but this is particularly very shocking. I urge the authorities to take the necessary action and to make a stand that animal abuse would not be tolerated in Malaysia. — CHRISTINE CHIN

The owner claimed that the perpetrators had used his housemate's laptop to transfer some files, including the offending video, and had forgotten to erase them after that.

He has lodged a police report at the Cyberjaya police station on July 31 with help from the Selangor Society for the Prevention of Cruelty to Animals (SPCA).

“Cruelty comes in many forms but this is particularly very shocking,'' said SPCA chairman Christine Chin.

“I urge the authorities to take the necessary action and to make a stand that animal abuse would not be tolerated in Malaysia.”

Stills of the video were also forwarded to canine welfare project Malaysian Dogs Deserve Better (MDDB) which posted the pictures on its Facebook page.

The posting garnered countless comments from enraged people from Malaysia as well as overseas,

Among those who commented was renowned bassist Andy Peterson who said: “Get the one who took the picture too.”

A Malaysian living in Canada, Juliana Vincent-Phillips, said the perpetrators should be deported, adding that “no one will miss these scums”.

MDDB rescue coordinator Irene Low said more police reports were being lodged to lend support to the SPCA's initial report.

She urged the public to obtain the sample report from the MDDB Facebook page at http://www.facebook.com/MalaysianDogsDeserveBetter

The Star/Asia News Network\


Related post:

Look, man threw dog into manhole!

Thursday, August 2, 2012

Crime Watch !

Crime Watch...
(1) Today I passed by a building which has an ATM machine. There was an old man looking at me. Suddenly, he called me. He said he didn’t know how to read, so he gave me his ATM card and asked me to help him withdraw money from the ATM machine. I answered ‘NO! If you need help, ask the security to help you.’ Then he said ‘never mind…’ and continued to find other people to help him…
REMEMBER: ATM machines have CCTVs. If you help him he will later claim that you have robbed him or stolen his ATM card. Besides, his ATM card could be a stolen one. So please be careful of these tactics.
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(2) Suddenly your house lights go off. From your window you find that your neighbours still have their lights. So you go out of your house to check the Meter Box. But once you open the door, a knife will be pointing at you and preventing you from closing it. This is when you will be robbed and injured.
REMEMBER: Even though your electricity suddenly goes off, DO NOT open your door immediately. Look around to see if there is anything unusual or if there is any noise around.
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(3) This is another incident. You may have heard about it before; it is about a lady who saw a kid crying by the roadside. When she spoke to the kid, the kid told her he was lost and wanted her to take him home. The kid even gave her a paper with his house address. So she took him home. But when she rang the door bell, she had an electric shock. Later when she woke up, she was naked in an empty room.
REMEMBER: Being such a compassionate and helpful person might not be a good thing these days. Girls, please be careful. DON’T BE TOO KIND!
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(4) One day, there was an old lady outside my house holding two packets of sweets. At first I thought she was our neighbour and wanted to give us these packs of sweets as a gift. But then when she spoke, I realise that she was foreigner. I could not understand what she was talking about. I guessed she must be asking for money. I sensed there was something wrong and immediately closed the door and ignored her. Later, I found she and an accomplice robbed someone else down the road.
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(5) I was at the ATM machine to withdraw some money. Behind me, there was an old lady. She asked me whether I was able to withdraw my money because she said she had problem with the machine. Suddenly a small girl came up beside me. The small girl was tugging and squeezing in front of me. I thought she was just naughty and playful. But then, the small girl placed her hand inside the tray of the ATM machine where the money was being dispensed out; ready to take away my money. I sensed something wrong and immediately pushed her away. Later I realised that the small girl and the old lady worked hand in hand together. She was trying to steal my money while the old lady was trying to distract my attention by asking me questions!
REMEMBER: BE VERY CAREFUL when you are at an ATM machine and be alert. Look out for anyone suspicious around you!
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(6) My parents are retired and stay at home most days. One afternoon, a young stranger went to their house and said his motorcycle had no more fuel and the petrol station was too far away, for him to push his bike there. So he asked my parents for an empty coke bottle to buy some petrol. He said he will pay RM2 for the bottle. So my mum gave one coke bottle to him. He really took out the money from his pocket, but it was a RM 100 note. He told my mum he had no small change and asked my mum to give him the change. Luckily my mum was smart. She just told him to take it for free.
REMEMBER: obviously that note isfake! Who would want to pay for RM2 for an empty coke bottle! It’s very OBVIOUS that that stranger was a trickster.
crimewatchlogo123452
(7) This happened in Bali . A newly married couple was having their honeymoon at the hotel. When both were in the changing room, the wife suddenly went missing. The husband was very anxious and went around finding her. He asked the hotel staff to help him find her. Then he thought his wife was just playing hide and seek. So he went back and waited for his wife. After a few hours, he decided to call the police. Three weeks passed and there was still no news about his missing wife. So he went back and was very disappointed and sad. A few years later, he came back to Bali , to watch a ‘FREAK SHOW’ in an old house. He saw a dirty and rusty metal cage. Inside there was a lady without limbs. Her body including the face was full of scars. When he had a closer look at her face, he was shocked to find out that she was his missing wife caged there and used for begging.
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(8) This happened in Shanghai . A few years ago, a lady reported to the police that her cousin sister was missing in the shopping complex. But after five years, one of her friends found her cousin sister begging at the road side on one of the streets in Bangkok , Thailand . The worst thing was that her cousin sister had no more limbs and her body was tied to a lamp post with a shackle (metal chain).
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(9) Let’s just shorten this story. DO NOT open your house door when you hear the sound of a BABY CRYING! It might be a trap! Women in the house must be alert to this form of trick. The police said it is the work of a robber or murderer using the recording of a crying baby to attract your attention. This normally happens at night and when you are alone in the house.
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(10) I read an email that was sent by my friend. Her friend, known as A, went to Luo Hu Commercial City with 2 friends, B and C. Luo Hu Commercial City is known as the Shenzhen counterfeit goods distribution center. There are many people there. It’s also near to the Shenzhen train station and Hong Kong ’s Luo Hu Port. C went to the toilet at the shopping centre while A and B waited outside. After waiting for a long, time they felt uneasy and went into the toilet to look for her. When they went in, there was nobody inside. Both were scared and they called C’s phone. There was no reply. So they reported to the police. The police asked them whether they had seen anybody suspicious going into the toilet. Both said there was none and it’s impossible to bring a person out of the toilet without them noticing! Then A remembered seeing a cleaner pushing a trolley in, and then coming out of the toilet. The police told them that were not the first time such a thing happened there. The police suspected a gang of criminals who were always attacking women in the the toilets of shopping complexes. They use cleaners to kidnap people to harvest their organs for sale.

REMEMBER: please be careful when using the toilet. Do not go to the wash room ortoilet ALONE (especially if you are female)! Please at least have a partner with you.
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