Thursday, February 2, 2012

FB's $5B IPO

Facebook Inc. (FB) filed for an initial public offering (IPO) on Wednesday, February 3, 2012. Such IPO could value the social network between $75 billion and $100 billion, which could be one of the biggest U.S. stock-market debuts of all time, topping rival Google Inc.'s 2004 IPO. Google Inc. holds the record for the largest U.S. Internet IPO by raising $1.9 billion at a valuation of $23 billion. In the filing with the Securities and Exchange Commission (SEC), FB said it is seeking to raise $5 billion.

FB’s SEC filing showed that the company produced a $1 billion profit last year from $3.71 billion in revenues. FB derives 85% of those revenues from advertising, with the rest from social gaming and other fees. The company further said in its filing that it has 845 million users globally.

The IPO is set to unleash a wave of wealth across Silicon Valley and yield potentially $100 million or more in fees for Wall Street banks managing the offering.

The company chose "FB" as its ticker symbol but hasn't decided whether it will trade on the New York Stock Exchange or Nasdaq Stock Market.

FB’s CEO, Mark Zuckerberg owns around 28% of the company and holds 57% of its voting share power, according to the filing. Zuckerberg will sell shares in the IPO and will use the proceeds to pay taxes, it said. The filing doesn't say how many shares the CEO intends to sell.

FB faces questions about its commitment to its users' privacy, an issue that had dogged it since its earliest days. Despite a settlement last year with the Federal Trade Commission in which the company agreed to independent privacy audits for 20 years, privacy advocates worry about the vast trove of user data it owns. Mr. Zuckerberg has promised users he is committed to protecting their privacy.

Facebook takes pains to mention the importance of privacy, mentioning the word 35 times in the filing, and even listing its "privacy and sharing settings" as one of the ways the company creates value.

(Source: Wall Street Journal Online)

Agnes M. Santiago, Entry #7

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