Probably the biggest news this week is Facebook’s first steps towards its Initial Public Offering (IPO). In baby terms, what this means is that, big companies and regular people like me and you should be able to own a part of the company and make decisions about how it is operated and share in whatever profits or losses it makes.
This week they have taken the first steps in announcing how much money they plan to raise, and how the company will be structured in terms of ownership and voting rights.
Of course, if they are going to convince us to pay for a piece of the company, they have to tell us every little dirty secret and all the tricks they have up their sleeves. So this is where it gets tricky. Here are some highlights from sources around the web.
1. The details of the listing
Facebook Inc. (FB), the social-networking website that in eight years changed the way the world communicates, filed to raise $5 billion in the largest Internet initial public offering on record.
Facebook, whose meteoric rise spawned an Oscar-winning film and captivated Wall Street, yesterday named Morgan Stanley as the lead underwriter on the IPO, while reporting a 24-fold increase in sales over the past four years to $3.71 billion in 2011. Full Story on Bloomberg
2. As with most things Facebook, there is concern about the percentage control that Mark Zuckerberg has. Dealbook writes,
Most important, he arranged the ownership of Facebook so as to give himself extraordinary power to steer the company. By the time Facebook filed for a $5 billion public offering on Wednesday, Mr. Zuckerberg had managed to hold on to more than one-fourth of the shares in the company, and his agreements with other investors enhanced his voting power to almost 60 percent of total shares.
That’s a greater measure of control than Bill Gates had at Microsoft when it went public in 1986 (49 percent), and far greater than what the co-founders of Google had in 2004 (16 percent each). Typically, say Silicon Valley veterans, a first-time entrepreneur gets to the public market with a far smaller stake in his or her creation. Mr. Zuckerberg’s arrangement leaves little room for investors to have much input on the company’s direction. Full Story here
3. Facebook wants to connect the approximately 2 billion internet users worldwide
Facebook’s IPO filing lays out a pretty good image of where CEO Mark Zuckerberg wants to take the company: He sees the social network as having significant historical value to the economy, governments and — he hopes — to every person connected to the Internet around the world.
“There are more than 2 billion global Internet users, according to an industry source, and we aim to connect all of them,” the company said in its S-1 filing with the SEC on Wednesday. Computerworld
4. Analysts divided over wether this is a good buy – CNN
5. Private Jet, Wildly profitable – More details emerge
The portrait of Facebook that emerges in Facebook’s over 150-page S-1 filing with the Securities and Exchange Commission is of a mature company — by Silicon Valley standards — already enjoying robust revenues thanks to a vast, active userbase churning out data for the site. Facebook CEO and co-founder Mark Zuckerberg also enjoys the use of a private plane, the filing revealed, and earned a base salary of $500,000 last year, more than triple the salary of Google co-founders Larry Page and Sergey Brin when Google filed for its IPO.
Facebook looks more seasoned than many of its Silicon Valley peers had when they announced plans to go public. According to the prospectus it filed with the SEC, Facebook has been profitable for the past three years. The company reported revenues of $3.7 billion last year, an 88 percent increase over the prior year, and earned a $1 billion profit, more than Google’s total revenue the year it debuted on public markets. Facebook’s income also dwarfs that of other internet companies that recently completed their IPOs. Zynga’s profits totaled $90.6 million in 2010, for example, while LinkedIn had barely flirted with profitability when it filed for its IPO and Pandora was still hundreds of millions of dollars short of breaking even.
Are you excited about this Facebook IPO? Do you have any concerns?