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49% of LinkedIn's (NYSE:LNKD) revenues in the March 2011 quarter came from "hiring solutions." That segment showed a 174% growth over the March 2010 quarter.

If half the revenue and most of the growth is coming form hiring solutions, then that means LNKD is essentially in the executive search/manpower business. The search business is very cyclical. When there is a recession, business dries up. When there is a hiring freeze, the search business craters, and presumably so will LNKD's market cap in the next recession, or if there is a double-dip recession.

There are a number of public firms already competing in the hiring solutions marketplace, including the following six whose combined market caps exceed $13 million: ManpowerGroup (NYSE:MAN), market cap of $5.2 billion; Robert Half (NYSE:RHI), market cap of $4.1 billion; Monster World (NYSE:MWW), market cap of $1.9 billion; Korn/Ferry (NYSE:KFY), market cap of $0.9 billion; Kelly Services (NASDAQ:KELYA), market cap of $0.7 billion; and Kforce KRFC), market cap of $0.6 billion.

On average, the stocks of the above six declined 62% from highs in 2007 to lows in 2009. In a recessionary environment, the same fate awaits LNKD.

Current Mrk

High

Low

Company

Cap ($bb)

2007

2009

% change

ManpowerGroup

$5.2

$63.06

$24.19

-62%

Robert Half

$4.1

$41.51

$14.41

-65%

Monster World

$1.9

$52.36

$6.22

-88%

Korn/Ferry

$0.9

$26.42

$8.30

-69%

Kelly Services

$0.7

$33.53

$6.30

-81%

Kforce

$0.6

$16.72

$5.59

-67%

Total

$13.4

Average

-62%

Source: A Jobs Recession Will Crater LinkedIn's Business