Facebook IPO coming soon?

[SportsFromA2]

Facebook Inc. could file papers for its initial public offering as early as this coming week, people familiar with the matter said, as anticipation mounts for what is likely to be one of the biggest debuts for a U.S. company.

The deal, seen as defining moment for the latest Web investing boom, could raise as much as $10 billion and value the social network between $75 billion and $100 billion, said people familiar with the matter. A valuation of $75 billion would be below earlier expectations.

The website, which in less than eight years has attracted more than 800 million members, has changed the way people across the globe communicate, from organizing political protests to sharing baby pictures.

The Internet giant is close to picking Morgan Stanley to lead the deal, these people said. Wall Street banks, many of them struggling amid a crimp in trading profits, have been jostling for a leading role in the deal, which could yield them tens of millions of dollars in banker fees, potential new business and bragging rights.

A nod for Morgan Stanley would mark a disappointment for rival Goldman Sachs Group Inc., which a year ago was viewed as having an edge to lead the deal. One person familiar with the matter said that while Morgan Stanley would likely land the coveted "lead-left" spot on an IPO financial filing, Goldman would also likely play a significant role.

Spokespeople for Facebook, Morgan Stanley and Goldman Sachs declined to comment.

Facebook could file documents with the Securities and Exchange Commission as early as this coming Wednesday, said one person familiar with the matter. But that timing is just one scenario Facebook executives are considering, the person said. Executives are also considering filing a few weeks later, the person said.

People familiar with the matter have said the company is targeting an IPO sometime between April and June.

A $10 billion Facebook offering would rank fourth among IPOs for U.S. companies, behind Visa Inc., General Motors Co. and AT&T Wireless, according to Dealogic. It would rank Facebook as the biggest U.S. Internet offering ever, replacing Google Inc., which raised $1.9 billion in 2004 at a $23 billion valuation.

At a $100 billion valuation, Facebook would be worth about the same as McDonald's Corp. and nearly half of Google.

Facebook's revenue is driven by its advertising business, as big brands rush to the site to interact with consumers through display ads and fan pages. Facebook has been able to increase its world-wide advertising revenue from $738 million in 2009 to $3.8 billion in 2011, according to estimates from research firm eMarketer. It isn't known if Facebook is profitable.

Facebook's final valuation will be determined by a variety of factors, people familiar with the matter said, such as investor demand for social media, the IPO market and the health of the European economy.

The IPO will mint a new generation of Silicon Valley millionaires on the level not seen since Google's offering. Some 3,000 people work at Facebook.

An IPO will also test the ability of Chief Executive Mark Zuckerberg, age 27, to manage a global company whose financial performance will be scrutinized every three months by investors. Mr. Zuckerberg started the company in 2004 out of his Harvard University dorm room. Overall, about 500 million users now log into the site daily, according to Facebook.

Mr. Zuckerberg had been reluctant to push forward with an IPO. People familiar with his thinking said he has been fearful of the damage an IPO could do to the company's culture. He wants employees focused on making great products, not the stock price, they said.

But outside forces are partly pushing his hand. Facebook executives began to realize in 2010 that Facebook would have more than 500 shareholders by the end of 2011, which would trigger a regulatory requirement that Facebook start publicly reporting financial information.

Mr. Zuckerberg decided it made more sense for Facebook to go public and reap some financial benefit from an IPO, rather than stay private but have to release its financial information, said people familiar with his thinking.

Leading the Facebook sale would be a huge win for Morgan Stanley, which last year cemented its position as the top Internet stock underwriter by leading the IPOs of LinkedIn Corp., Groupon Inc., and Zynga Inc. The bank's global tech banking team, led by Michael Grimes and Paul Chamberlain, is also based in Menlo Park.

Facebook would cap a recent wave of Web IPOs, some of which have struggled amid growing investor scrutiny of the new Internet companies. But investors and analysts said now could be a good time for a Facebook offering.

This year, the overall market has risen, and on Friday other Internet stocks rallied on news that Facebook would soon file for a deal. "The excitement around Facebook is still enormous," said Max Wolff, an analyst at GreenCrest Capital, which researches companies going public.

The recent IPO climate "hasn't been particularly strong," said Peter Falvey, co-head of the technology banking group at Morgan Keegan & Co. But Mr. Falvey added that with "the recent stock market strength and maybe some green shoots in the economy, there could be a fortuitous window for Facebook."

http://online.wsj.com/article/SB1000...821038498.html

[SportsFromA2]

As expected, Facebook just filed its $5 billion mega-IPO. We're sorting through the details now, but some important stats already stand out: 845 million users, 100 billion friendships, and a whole lot of money heading Zuck's way. Stock market, meet FB.

Of those 845 million users, 483 million were active on a day to day basis, an impressive level of engagement (especially compared to how many inactive users other social media sites like Twitter is burdened with). The company also took in 3.7 billion in revenue last year. That's chump change compared to the likes of Apple and Google—and means Facebook has a long way to go to live up to its valuation—but the fact that the company is able to make even that much money through dinky sidebar ads is a feat in and of itself.

Not that Facebook makes all of its money off of tooth whitening offers; a whopping 12% of the money the company in came from Zynga, and presumably not because of a few well-timed Farmville trades. To lean so heavily on one source for incoming money could be daunting for potential investors—particularly when that source could easily turn out to be a fad.

That's not the only rocky road ahead. As part of its filing, Facebook is required to disclose possible pitfalls ahead for the company. And there are a lot of them, starting with, curiously, mobile:

We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.

There's no elegant way to serve you ads when you check your news feed through a Facebook app or a mobile browser. Which means it's terribly difficult for Facebook to make money during that time.

Most of all, what emerges is the portrait of a platform that, despite its global prominence and ubiquity, hasn't yet come into its own as a business. And to date, it hasn't had to. The company made a billion dollars in profit last year, nearly twice as much as in 2010. For a private company, that's better than fine.

But a public company has shareholders to answer to, looming institutional investors who will be clamoring for Facebook to find a way to rid itself of Zynga dependency, to find a way to turn your iPhone clicks into dividends. The company will have to answer for its rising costs and waning growth. Whether that answer comes at the cost of user experience, of your privacy and your security, remains to be seen.

Oh, and now seems to be as good a time as any to reiterate that however Facebook's IPO preforms, you won't be getting rich off of it. That's strictly insider/banker territory. It'll be fun to watch from the sidelines, though!

http://gizmodo.com/5881424/facebook-files-5-billion-ipo

[EvenflowTen]

So there are going to be a lot of millionaires and billionaires created essentially overnight once the IPO is released or whatever. I think I had read something like over 1,000 millionaires will be created once the IPO hits.

What does one do when they wake up an instant millionaire, then the night before they simply held some stock options and made a basic programmers salary? Do you still go to work everyday with the same drive and mentality that you want to be better than your competition (even though Facebook really has no real social networking competition)? How many of the Facebook staff are going out the next day and buying that dream car or dream home they have always wanted?

[sseelhoff]

So there are going to be a lot of millionaires and billionaires created essentially overnight once the IPO is released or whatever. I think I had read something like over 1,000 millionaires will be created once the IPO hits.

What does one do when they wake up an instant millionaire, then the night before they simply held some stock options and made a basic programmers salary? Do you still go to work everyday with the same drive and mentality that you want to be better than your competition (even though Facebook really has no real social networking competition)? How many of the Facebook staff are going out the next day and buying that dream car or dream home they have always wanted?

Same thing happened with Google and Microsoft, among others. They didn't seem to have issues.

[Marklar]

Don't see this making anyone rich, unless you purchase a huge number of shares.

[EvenflowTen]

Don't see this making anyone rich, unless you purchase a huge number of shares.

It's not the general public that's going to make it rich, but the employees and people who have done work with and for Facebook that got stock options as part of their compensation. There was some artist that was paid in FB stock for painting the offices, and if the IPO comes out what it is expected to, he stands to make $300 million if he sold that stock once the IPO hits. So that notion that no one is going to make big money is just wrong.

[Marklar]

Don't see this making anyone rich, unless you purchase a huge number of shares.

It's not the general public that's going to make it rich, but the employees and people who have done work with and for Facebook that got stock options as part of their compensation. There was some artist that was paid in FB stock for painting the offices, and if the IPO comes out what it is expected to, he stands to make $300 million if he sold that stock once the IPO hits. So that notion that no one is going to make big money is just wrong.

like i said...huge number of shares.

[EvenflowTen]

like i said...huge number of shares.

Like I said, they didn't purchase anything, they were given shares in lieu of compensation. But they were not purchased. It's even more so I think for regular employees that were given shares as part of bonuses or whatever. But they were not BOUGHT, they were either GIVEN or EARNED.

[pGekko]

I don't understand what Marklar is saying, but that's nothing new really. I read that there will be over 1,000 employees that will own $5M+ on the IPO date. A small fraction of $100B is still A LOT of money.

Problem is, this thing will be dead money by the time anyone not offered the IPO can buy shares. I'd stay on the sidelines or short it if anything. The fundamentals will never catch up to the inflated IPO pricing.

[EvenflowTen]

I don't understand what Marklar is saying, but that's nothing new really. I read that there will be over 1,000 employees that will own $5M+ on the IPO date. A small fraction of $100B is still A LOT of money.

Problem is, this thing will be dead money by the time anyone not offered the IPO can buy shares. I'd stay on the sidelines or short it if anything. The fundamentals will never catch up to the inflated IPO pricing.

Right, I had heard last night on Market Watch on NPR some guy saying something along the lines that, in order to justify the valuation, Facebook would need to show something like 30% growth in revenue every year for the next 10 years or something like that.

[Marklar]

I confuse myself half of the time, but I just don't see Facebook maintaining their current growth and position in that market. Sure, you initially will have guys make some money, but long term, I just don't see it. They will go the way of Myspace, advertising will dominate the site, and users will go to the newest social site.