LinkedIn Raising $1 Billion, Will Invest in Infrastructure

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LinkedIn CEO Jeff Weiner in front of the New York Stock Exchange for the company's 2011 IPO. LinkedIn plans to raise $1 billion in a secondary stock offering. (Photo: LinkedIn)

The business-focused social network LinkedIn plans to raise an additional $1 billion, and will use some of the funding to expand its infrastructure. That's bound to be good news for one or more data center providers.

LinkedIn's secondary stock offering could give the company an investment warchest of up to $1.8 billion. That can help the company expand its infrastructure to keep pace with its robust growth, which has seen the monthly unique visitors to its web site increase to 143 million, up 34 percent year over year.

The computing horsepower to store and analyze information for 238 million users requires data center space. In an era of excitement about the future of "big data" and user analytics, LinkedIn's data scientists have access to a rich trove of data about trends in hiring and careers. The company has developed extensive software and tools to process and analyze its data (see the LinkedIn Data blog for details).

Large Data Center Lease in Virginia

Earlier this year LinkedIn secured a new data center in northern Virginia, leasing a large chunk of space from data center developer Digital Realty Trust. The $109 million, 11-year deal marked LinkedIn's first use of wholesale data center space, in which it leases a finished "turn-key" data hall from a third-party provider. The new data center in northern Virginia will provide up to 6 megawatts of critical power for IT equipment.

LinkedIn also rents space in data center facilities operated by Equinix, which offers colocation space, in which servers are housed in dedicated cages within a data hall that may also house other tenants.

So what's on LinkedIn's data center shopping list? Additional data center space could help LinkedIn address a need in its business continuity and disaster recovery planning - the lack of a real-time backup data center.

Boost DR Capabilities

"We have implemented a disaster recovery program, which allows us to move production to a back-up data center in the event of a catastrophe," LinkedIn says in a recent SEC filing from February. "Although this program is functional, it does not yet provide a real-time back-up data center, so if our primary data center shuts down, there will be a period of time that our services will remain shut down while the transition to the back-up data center takes place."

LinkedIn said it expects to spent $137.5 million in the first six months of 2013 on property and equipment, compared to $59.7 million in the first six months of 2012. For the full year 2013, LinkedIn expects to invest $215 million on property and equipment.

"Our primary investing activities have consisted of purchases of property and equipment specifically related to the build out of our data centers," the company said in a recent 10Q filing.

With a lease of that size in a single market, LinkedIn would join a select group of "super-wholesale" customers, which are hotly pursued by data center developers for their ability to lease large footprints and serve as anchor tenants in new buildings.