Posts Tagged ‘social networking’

Potential Facebook IPO Could Value Company at $100 Billion

Monday, June 27th, 2011

Facebook is likely to file for an initial public offering (IPO) as early as October or November that could value the popular social networking site at more than a whopping $100 billion.   Goldman Sachs is the top candidate to manage the lucrative offering, which could come in the 1st quarter of 2012.  Facebook, whose chief operating officer last month called an IPO “inevitable,” made no comment on the report.

The company’s IPO likely would probably be prompted by a section of the 1934 Securities and Exchange Act known as “the 500 rule” At heart, the rule mandates that once a private company has more than 500 investors, it must release quarterly financial information to the Securities and Exchange Commission, just as public companies do.  Facebook, which is likely to cross the 500-investor threshold this year, would probably launch a formal IPO in advance of a public-company reporting obligation that would be required next April.  Another factor motivating the IPO, according to people familiar with the plans, is Facebook’s wish to increase employee compensation.  Early in 2010, Facebook curbed employees’ ability to sell their company shares privately to other investors — a move that may now be prompting employees to quit Facebook so they can monetize their shares.  If the company goes public, however, employees will be able to sell their stock on the open market, allowing them to cash in on their holdings.

“Unable to sell their private shares, Facebook employees are growing restless,” according to Kate Kelly at CNBC.   “An initial public offering is expected.  A factor in the company’s IPO timing is the Securities and Exchange Commission’s requirement that some companies like Facebook must disclose financial information if they have more than 500 private investors.”  The IPO speculation and record high valuation is comes on the heels of recent numbers showing declining user-ship in some of Facebook’s leading markets.

Writing in the Wall Street Journal, Shira Ovide says that “Facebook is on track to exceed $2 billion in earnings before interest, taxes, depreciation and amortization for 2011.  That’s even higher than the expected 2011 profit circulated in the early part of the year when Goldman Sachs and Russian investment house Digital Sky Technologies invested in Facebook at a $50 billion valuation.  If Facebook ends the year with $2 billion in Ebitda, would IPO investors stomach a 50 times trailing multiple valuation?  Seems bubble-like.  Trust us.  Wall Street bankers, lawyers, P.R. mavens, caterers and everyone else are slobbering for a slice of the Facebook IPO magic.  Facebook has been meeting with potential bankers that want to shepherd the IPO.  Goldman Sachs is thought to have an inside track to lead the IPO thanks to its recent investment in Facebook, but don’t count out big banks such as J.P. Morgan and Morgan Stanley, which have led recent big tech IPOs.  Facebook CEO Mark Zuckerberg has been non-committal about an IPO for a long time.  As recently as December, Zuckerberg gave his weird deer-in-headlights stare when ’60 Minutes’ asked him whether he would ever push his baby into the public markets.  ‘Maybe’ was Zuckerberg’s answer.  But momentum is taking over.”

Not so fast, says Fortune magazine’s Dan Primack. According to Primack, “Pay attention to news that Facebook is planning its IPO.  But take its proposed valuation with a grain of salt.  First, the most recent private trades of Facebook stock came in at around $85 billion, and private trades are meant to be done at a discount to public valuations.  LinkedIn shares, for example, traded at $23 per share on the private markets six months before going public at $45 per share.  At that velocity, Facebook actually would be valued at $165 billion next January.  More importantly, it’s impossible to intelligently speculate on an Internet company valuation 6-10 months out.  Will the bubble still be inflating?  Will it have popped?  Will macro trends have continued their anemic recovery, or double-dipped back down?  Facebook is probably immune to the timing issues related to IPO windows, but it does not stand apart from the economy at large.  If we experience a massive advertising pullback, for example, then Facebook could take a hit in its largest revenue pot (or at least a growth slowdown).  Not saying that will happen, but obviously it could.  To me, the only value in today’s ‘$100 billion’ report is in referring back to it when the company has an actual public valuation.”

Facebook May Breach the Great Firewall of China

Tuesday, May 3rd, 2011

Social networking could gain 1.3 billion new users if a deal goes through that will introduce Facebook to ChinaFacebook Inc. has signed an agreement with Baidu, Inc.  a search engine company, to create a social-networking website in China.  “We are currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers,” Palo Alto, CA- based Facebook said.

The arrangement follows several recent meetings in China between Facebook CEO Mark Zuckerberg and Baidu CEO Robin Li.  The Baidu website would not be incorporated with Facebook’s international service, and a potential launch date is “not confirmed.”  Facebook said it is “currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers.”  By entering the Chinese market, where the world’s most popular social-networking service is currently banned, Facebook would gain access to the nation’s nearly 500 million Internet users.

According to Pascal-Emmanuel Gobry of MSNBC Business Insider, “The deal makes sense for both sides. On Facebook’s side, it needs a big local partner to break into the huge Chinese market. On Baidu’s side, it is threatened by social network juggernaut Tencent, and it might be a safer bet to build a social network with one of the most successful social companies in the world than to try to build its own.”

Baidu, which is China’s largest search engine, wants to provide more social networking opportunities in China.  The impediment has been the Chinese State, which owns the “Great Firewall of China” and has blocked sites like Facebook, Twitter and YouTube.  Google removed its search engine last year.

Writing on the website Digital Trend, Molly McHugh is curious about how Facebook can compete if it enters the Chinese market.  “Facebook has been blocked in China since 2009, when riots in the country’s Xinjiang region led to severe crackdowns on Internet use.  Since then, statements from Chinese officials and Facebook CEO Mark Zuckerberg have hinted at the possibility of cooperation between the two, if a compromise between the nation’s overbearing censorship and Facebook’s ‘openness’ can be reached.  Now it looks as though something is going on.  What exactly that may be is still up in the air, but numerous reports say Facebook is working with China to come up with a solution.

“According to Marbridge Consulting, as well as a few blogs,” according to McHugh, “a post on Sina Weibo from Hu Yan Ping, the founder of a Chinese market research firm claims that Facebook will be collaborating with Baidu to build an entirely new social networking site.  Ping wrote, ‘Facebook really is about to enter China, the agreement is signed.  A domestic website will work with Facebook to create a new site.  This new site is not interlinked with Facebook.com.  The question is, will this live or die in China?’”

Will the iPad Make Laptops Obsolete?

Monday, April 12th, 2010

Will iPad put the PC to pasture?  Does the introduction of Apple’s new iPad sound the death knell for laptop computers?  The Wall Street Journal’s Personal Technology columnist Walt Mossberg’s test drive of an iPad has him believing that the new product has “the potential to change portable computing as we know it.”  During the test drive, Mossberg used his laptops only 20 percent of the time, because he found the iPad to be extremely user friendly and significantly lighter in weight.

According to Mossberg, “If people see the iPad mainly as an extra device to carry around, it will likely have limited appeal.  If, however, they see it as a way to replace heavier, bulkier computers much of the time – for Web surfing, email, social-networking, video- and photo-viewing, gaming, music and even some light content creation – it could be a game changer the way Apple’s iPhone has been.”  Weaknesses include the inability to write and edit long documents or view Adobe Flash videos, which the iPad doesn’t support.

Based priced at $499 and topping out at $829, the iPad “is thinner and lighter than any netbook or laptop I’ve seen,” Mossberg says.  “It weighs just 1.5 pounds, and its aluminum and glass body mere a mere half-inch thick.  It boasts a big, bright color 9.7-inch screen that occupies most of the front.  As on all Apple portable devices, the battery is sealed in and non replaceable.  It has a decent speaker, and even a tiny microphone.”

Mossberg concludes:  “All in all, however, the iPad is an advance in making more sophisticated computing possible via a simple touch interface on a slender, light device.  Only time will tell if it’s a real challenger to the laptop and netbook.”