Wednesday, February 1, 2012

Zuckerberg goes Public!

Facebook is a vital part of people's Internet lives and safely, the most successful company in the history of social media. Facebook as of the early part of 2012 has at least 800 million active members. Its closest competitor, Google+, has less than a tenth the active membership — 60 million people.

A January 2009 study ranked Facebook as the most used social networking service by worldwide monthly active users.Entertainment Weekly included the site on its end-of-the-decade "best-of" list, saying, "How on earth did we stalk our exes, remember our co-workers' birthdays and bug our friends before Facebook?"

It is therefore an exciting phase in the history not only of Facebook as a company on the one hand and its 800 million users on the other but also of the entire social media that Facebook is about to engage in an Initial Public Offering. The company is expected to file as early as this week to sell stock on the open market in what will be the most talked-about initial public offering since Google in 2004.

Around the United States and the world, regular investors and IPO watchers are anticipating some kind of twist — perhaps a provision for the 800 million users of Facebook, a company that promotes itself as all about personal connections, to get in on the action.

"Pandemonium is what I expect in terms of demand for this stock," says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm. "I don't think Wall Street would want to anger Facebook users."

The most successful young technology companies have a history of doing things differently. Google's IPO prospectus contained a letter from its founders to investors that said the company believed in the motto "Don't be evil."

Facebook declined to comment, but Reena Aggarwal, a finance professor who has studied IPOs at Georgetown University's McDonough School of Business, believes Zuckerberg will emulate Google's philosophy, at least in principle.

Founders Larry Page and Sergey Brin wanted an IPO accessible to all investors, and said so in their first regulatory filing. Facebook may say something similar when it files to declare its intention to sell stock publicly.

Facebook is expected to raise as much as $10 billion, which will value the company at $75 billion to $100 billion, making it one of the largest IPOs. A stock usually starts trading three to four months after the filing.

The highly anticipated filing will reveal how much Facebook intends to raise from the stock market, what it plans to do with the money and details on its own financial performance and future growth prospects.

I guess we all just have to wait for further developments and be ready for whatever is in store for us care of the cocky but brilliant Facebook founder Mark Zuckerberg.

Source: Associated Press (Pallavi Gogoi)

Danjun Lucas

Blog Entry No 7

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