Monday, December 5, 2011


 Social networking juggernaut Facebook is targeting sometime between April and June of 2012 to make its initial public offering that it hopes will value it at more than $100 billion.

The Wall Street Journal cited sources familiar with the matter who said such an IPO would be one of the largest offerings ever.

It said Facebook is now in internal discussions over the timing of its filing with the Securities and Exchange Commission, and is considering filing dates as early as this year, although chief executive Mark Zuckerberg has not made any final decisions.

Zuckerberg had publicly expressed reluctance to do an IPO, opting to keep Facebook private longer than many suspected he would.

But he appears to be warming to the idea, the WSJ said.

On the other hand, the WSJ report said Facebook remains aloof from Wall Street and appears to want to play by its own rules.

While other companies explore an IPO once they have $100 million in revenue, Facebook is expected to debut with more than $4 billion in revenue - bigger than Web veteran Yahoo Inc.

Facebook has also crafted its own prospectus, said the people familiar with the matter. A prospectus is usually prepared by bankers and lawyers hired by a company.

Facebook will be required to make its financial information public by April, because the company will cross the 500-shareholder limit by the end of this year.

The SEC requires companies with more than 500 shareholders to publicly disclose its financial information.

Facebook could publish its financial information in April without an IPO, but board members and top executives have privately acknowledged that it would leave the company at a severe disadvantage, since they would have most of the liability that comes with being a public company, but lose out on the fundraising benefits of a public offering, WSJ quoted these people as saying.

WSJ cited data from Dealogic that only 13 IPOs have ever been completed with a value greater than $10 billion, and just three of those have been for U.S. companies.

Dealogic tracks new securities issues.

The only U.S. issuers at that size level have been Visa Inc. at $19.7 billion in 2008; General Motors Co. at $18.1 billion in 2010; and AT&T Wireless Services Inc. at $10.6 billion in 2000.

The most valuable company ever to go public was Industrial & Commercial Bank of China, which sold $21.9 billion of stock in October 2006 and finished its first day of trading with a market value of $148 billion, Dealogic said.

Hotly anticipated

WSJ noted a Facebook IPO has been hotly anticipated for several years, and viewed as a defining moment for the latest Web investing boom.

But so far, Facebook had been vague about whether it would even make such an offering and silent on timing of an IPO.

"We're not going to participate in speculation about an IPO," said Facebook spokesman Larry Yu.

On the other hand, the WSJ said an IPO is likely to come to market at a time when investors are beginning to question the value of some newer Internet businesses.

It noted the most recent IPO, an $805 million float of discount-deal service Groupon Inc. last Nov. 3, plummeted 42 percent in price in the past five trading days after surging in its first day of trading.

Business-networking service LinkedIn Corp., whose stock more than doubled from its IPO price on its first day of trading May 19, has since fallen 36 percent, but remains 33 percent above its IPO.

Talks with bankers

WSJ cited people familiar with the matter who said Facebook Chief Financial Officer David Ebersman has been leading the company's talks with Silicon Valley bankers about an IPO.

Although bankers are aggressively pursuing the company, Facebook remains elusive about a commitment to specific banks.

The WSJ quoted its sources as saying Ebersman told some bankers that he is skeptical over what contribution investment banks could make to a Facebook IPO, since the company is so highly sought after by major investors.

On the other hand, a Facebook offering of $10 billion would be the largest IPO by any technology or Internet company.

The largest U.S. Internet IPO, the $1.9 billion sale in 2004 by Google Inc. which valued Google at $23 billion, ranks No. 3 among global Internet IPOs.

Facebook gets revenue from its online advertising business, as big brands rush to the site to interact with consumers through display ads and fan pages.

Facebook's worldwide ad revenue is expected to hit $3.8 billion this year, up from $1.86 billion a year earlier, according to data compiled by eMarketer.

The network's share of display ad revenue in the US is expected to grow to 16.3% in 2011 and 19.5% in 2012, eMarketer found.

More acquisitions

Reuters quoted Eric Feng, a former partner at venture capital firm Kleiner Perkins Caufield & Byers and who now runs social-networking site Erly.com, as saying the cash Facebook will get in an IPO would allow them to make more acquisitions and refine or work on new projects, such as a rumored-Facebook phone or a netbook.

Feng added having tradeable stock will also allow Facebook to attract more engineering talent who might have been more attracted to the company in earlier days when it was growing faster but now perhaps might be attracted to other companies.

"It'll be a powerful bullet for them," said Feng.

Investors have been increasingly eager to buy shares of Facebook and other fast-growing but privately-held Internet social networking companies on special, secondary-market exchanges. — TJD, GMA News

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