Posts Tagged ‘Social network’

Is the Timing Right for a Facebook IPO?

Wednesday, December 14th, 2011

Facebook is contemplating the idea raising about $10 billion in an IPO that would value the predominant social-networking website at more than $100 billion.  At $10 billion, the offering would raise significantly more money than any other technology IPO, and Facebook expects investors to be eager to buy into the social-networking company.  The IPO would overshadow that of the previous record holder, Infineon Technologies AG, which generated $5.23 billion in its 1999 debut.  Agere Systems Inc., which raised $4.14 billion in 2000, currently occupies second place.

Mark Zuckerberg, Facebook’s 27-year-old founder and CEO, will undoubtedly be rewarded by the website’s rise.  A valuation of $100 billion will further increase Zuckerberg’s net worth which had earlier been estimated at $17 billion, according to Forbes magazine.

Facebook expects federal regulators to call for the firm to disclose its financial results by April 30, 2012 — if it doesn’t go public sooner.  Facebook chose to wait until next year to launch its IPO to give CEO Mark Zuckerberg extra time to add users and increase sales.  Facebook, which has a staggering 800 million users, is also increasing its focus on mobile technology, aiming to leverage the shift to smart phones and tablets.  The firm expects its next billion users to connect primarily via mobile devices, rather than desktop computers.

Zuckerberg noted that an IPO isn’t something he has spent “a lot of time on a day-to-day basis thinking about.  We’ve made this implicit promise to our investors and to our employees that by compensating them with equity and by giving them equity, that at some point we’re going to make that equity worth something publicly and in a liquid way.  Now, the promise isn’t that we’re going to do it on any kind of short-term time horizon.  The promise is that we’re going to build this company so that it’s great over the long term.  And that we’re always making these decisions for the long term, but at some point we’ll do that.

Writing in the New York Times’ “Deal Book” column, Steven M. Davidoff isn’t certain that this is the correct time for a Facebook IPO.  “Facebook is in a corner.  Another Internet hotshot, Groupon, is trading below its offering price, and the market for internet initial public offerings over all appears to be deflating.  The European sovereign debt crisis isn’t helping the market gloom.  The coming months are shaping up to be a bad time to undertake an IPO.  Still, Facebook will almost certainly have to go public during this time whether it wants to or not — and whether or not it can get a valuation of $100 billion or more in doing so.  And it’s partly Facebook’s fault — it just has too many shareholders.  Securities regulation requires a United States company with 500 or more shareholders of record to begin filing reports, including audited financial information, with the Securities and Exchange Commission four months after the year it exceeds this threshold.  Facebook most likely exceeded 500 shareholders this year.  By the end of April 2012, it will become subject to this heightened regulation and have to disclose a spate of confidential business information.”

What does the prospect of an IPO mean to potential investors? TechCrunch writer Josh Constine wasn’t optimistic in a post bluntly titled “Why Greedy Stockholders and a $100 Billion IPO Could Hurt Facebook.” Constine says that if Facebook becomes subject to the desire of its stockholders, the site will innovate less by making profit a higher priority than user experience.  For example, more ads are likely to pop up on users’ pages.  “Outside stockholders could detract from Facebook’s vision and momentum,” he wrote.  “They could push for faster returns, and pressure the company to display more ads, turn mobile into a direct revenue stream, and play it safe with product.  This might produce short-term gains, but could hamper what CEO Mark Zuckerberg has built into a core communications utility for the world.”

Google+ Off to a Good Start – Will It Last?

Tuesday, August 9th, 2011

Just one month into its launch, Google+ has seen extraordinary growth, netting some 20 million unique visitors.  Still, it faces several key challenges before it can become the dominant force in social media.  Online metrics company ComScore said that of the 20 million users, five million of those are from the United States.  “Google+ is on an unprecedented growth trajectory over its first three weeks, reaching 20 million visitors faster than any site in recent memory,” Comscore Vice President Andrew Lipsman said.  The estimate comes a week after Google CEO Larry Page said that the company already had accumulated 10 million registered users. While registered users and unique visitors are not necessarily the same thing, that growth has been nothing short of impressive.

While the rate of growth is unparalleled, the social network is still small when compared with its rivals such as Facebook and Twitter, which have 750 million and 200 million registered users, respectively.  Google+’s success will depend on how Google “converts this strong trial base into regular users,” Lipsman warned.  While competitors Facebook and Twitter have become online destinations in themselves; more than 50 percent of traffic coming to Google+ is initiated by visits to Google or Gmail, according to Experian HitWise.  YouTube is a significant referrer.

Writing on the DVice website, Raymond Wong says that “Google+, the new guy on the social networking scene isn’t doing too bad.  After Google CEO Larry Page announced last week that Google+ had 10 million users in a mere two weeks, it appears they’ve added another 10 million users.  Talk about being the hottest thing in town.  People said that Google couldn’t build a social network that anybody would give two cents about, but somehow they’ve managed to do just that.  According to an independent comScore report, the new Google+ social network has hit 20 million unique visitors in three weeks.  Some have called Google+ a Facebook rip-off.  Some have joined simply to see what the buzz is all about, much like how everybody started Google and for a brief moment in time and then disappeared into oblivion. For now, none of that matters.  Google+ is gaining more users everyday, and Google is sure to be super excited by all the signups.”

So while we have a lot of work still to do, we are really excited about our progress with Google+,” Page said, noting that Google will re-focus on its core products and on new innovations.  “Google+ is also a great example of another focus of mine — beautiful products that are simple and intuitive to use and was actually was one of the first products to contain our new visual redesign.”  Google+ isn’t Google’s first expedition into the world of social media and its excitement over having 20 million Google+ users may be early.  Google introduced Google Buzz in February 2010 and immediately saw user numbers swell; it was later panned.

Reports are that Google will, unlike Facebook, host games on its own servers — this could make them faster and less prone to glitches.  The Google+ code mentions a gaming platform, and the company has reportedly invested as much as $200 million in the leading social gaming company Zynga.  There has been no official announcement about if and when the Google game platform will launch or how it will be designed.

Facebook is still beating Google+ in time spent on a social network.  HitWise research director Heather Dougherty said the average visit time for Google+ is five minutes and 50 seconds, compared with almost 22 minutes on Facebook.  Dougherty also examined how users arrived at Google+.  Google.com (at 34 percent) and Gmail (at 26 percent) account for 50 percent of all traffic to Google+; another six percent come from YouTube and Google Profiles.  Facebook ranked third among websites visited immediately prior to Google+, an indication that many social-network users have multiple accounts.  Google+ ranks as the 42nd most visited social networking site in the United States, and was the 638th most visited website.  Broken down by region, most of Google+ visitors are from Los Angeles, New York City and San Francisco (in descending order).