Unconfirmed reports say the seven-year-old networking site LinkedIn started by ex-Paypal exec Reid Hoffman wants to go public.

Bloomberg says the company has hired Morgan Stanley, JPMorgan Chase and Bank of America to run up the prospectus by the end of the quarter.

It would be the first major American social networking site to IPO. It has 85 million members and an implied valuation of ~$2.2 billion deduced from sales of its stock on the online secondary market exchange SharesPost.

The news follows word of Goldman Sachs and Russia's Digital Sky Technology putting $500 million in Facebook in a deal that reportedly values Facebook at a staggering $50 billion, 25 times its 2010 revenues.

Reuters, which broke the LinkedIn story, says it needs to get out before Facebook lest it be mowed down by the Facebook juggernaut.

Reportedly reluctant to go public, Facebook isn't supposed to IPO before late next year. However, regulators are supposedly investigating its $450 million deal with Goldman and Goldman's commitment to raise another $1.5 billion for Facebook from only its well-heeled clients for fees said to be worth nearly 10%. If the SEC finds Facebook has more than 499 investors it will have to make financial disclosures and so might as well go public, which is suspected is Goldman's motive.

Henry Blodget, yes, that Henry Blodget, says that's because of the deal Facebook financials leaked and it made $200 million on revenues of $777 million in 2009. He says its 25% net profit margin is a lot higher than people thought. Estimates say it made $400 million last year on revenues of around $2 billion.

LinkedIn's backers include Sequoia, Greylock Partners, Bessemer Venture Partners and Goldman Sachs.