A team of Russian hackers broke into a handful of sites and posted online a reported 6.5 million stolen passwords. In virtually all the cases, LinkedIn says, only the passwords were compromised while identifying user information remained safe.
"At the time they were initially published, the vast majority of those passwords remained hashed, i.e. encoded, but unfortunately a subset of the passwords was decoded," wrote LinkedIn director Vicente Silveira in a blog post.
In the days since, LinkedIn has disabled accounts it believes to be at risk. We don't know how many users were affected. All we know is that an indeterminate number were contacted to change their passwords for security purposes. Most, if not all, of that work should now be complete.
The news has only added to recent share price pressure, with LinkedIn now trading about 22% off its 52-week high of $120.63 a share for a market value of $9.67 billion. Not bad for a company disrupting an industry that brings in billions in revenue annually.
Let's also remember the nature of LinkedIn's business. This isn't a transactional network in the same way that Amazon.com, eBay, and even Facebook (NAS: FB) is. As such, it's not clear a more penetrating breach would have dramatically increased the risk of identity theft.
Finally, consider history. With this breach, LinkedIn joins an esteemed group to have been hacked:
Facebook, which suffered a breach in January 2011 when a hacker pretending to be co-founder Mark Zuckerberg posted to Zuck's fan page a proposed "social" fundraising strategy that would end-run the IPO market. (In hindsight, that might have worked out better for some.)
Yahoo! (NAS: YHOO) , which suffered a breach in 2008 when a hacker exploited a weakness in the company's email retrieval system to break into then-VP-candidate Sarah Palin's inbox.
The message? LinkedIn has arrived, even if investors don't yet see value in how the company is disrupting the recruiting business. Billions are at stake, says one of our top tech analysts, and he's encouraging investors to turn their attention from Facebook to LinkedIn as a result. Full access to his research is freely available here -- but only for a limited time, so be sure to act quickly.
At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google at the time of publication. Check out Tim'sweb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Facebook, LinkedIn, and Amazon.com. The Motley Fool has sold shares of Sony short.Motley Fool newsletter serviceshave recommended buying shares of eBay, LinkedIn, and Amazon.com. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.