Thursday, February 02, 2012
Facebook Seeks to Raise $5B in Biggest Internet IPO
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Facebook has filed to raise $5 billion in an initial
In its regulatory filing Wednesday with the
Securities and Exchange Commission, Facebook
indicated it hopes to raise $5 billion by selling a
small percentage of its shares to the public in its
The company 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.
A $100 billion market capitalization would value
Facebook at 26.9 times trailing 12-month sales.
Facebook didn?t specify the number or price of shares
it will offer, and the $5 billion amount is a
placeholder used to calculate fees and may change.
Co-founded in 2004 by Mark Zuckerberg, Facebook has
grown into the world's dominant social- networking
site, squelching competitors such as MySpace Inc. with
its more than 800 million users. While Facebook?s
sales almost doubled last year, the company faces
increasing competition from rivals such as Google,
which debuted its own social-networking service last
year and Twitte, the filing shows.
The stock would trade under the symbol FB on either
the Nasdaq Stock Market or the New York Stock
Depending on how long regulators take to review
Facebook's IPO documents, the company could be making
its stock market debut around May.
In a letter included in Wednesday's filing, Zuckerberg
paints a rosy, idealistic picture of Facebook.
"Facebook aspires to build the services that give
people the power to share and help them once again
transform many of our core institutions and
industries," he wrote.
Zuckerberg also pledged to stay true to Facebook's
scrappy roots even on the road to becoming a
"The word 'hacker' has an unfairly negative
connotation from being portrayed in the media as
people who break into computers," he wrote. "In
reality, hacking just means building something quickly
or testing the boundaries of what can be done."
According to the filing, Zuckerberg is the company's
top holder with 28.4 percent of the shares, the filing
shows. He also has proxy agreements with fellow
stockholders that potentially give him voting control
over more than half the shares. Accel Partners remains
the top outside stakeholder with 11.4 percent of the
investor votes, while Dustin Moskovitz, one of
Zuckerberg?s co-founders, holds 7.6 percent voting
In outlining its potential risks in the filing,
Facebook cited hacker attacks, regulatory scrutiny, a
shift to mobile technology and rivals such as Google+.
The company also said it would face competition in
China if it manages to gain access to that market,
where its site is currently blocked.
Facebook is also increasing its focus on mobile
technology to take advantage of the shift to
smartphones and tablets. It expects its next 1 billion
users to come mainly from mobile devices, rather than
As the site's popularity grew, banks, hedge funds and
mutual fund companies started buying stock. In January
2011, Facebook said it raised $1.5 billion in a
financing round led by Goldman Sachs that valued the
company at $50 billion. Goldman Sachs, funds managed
by the firm, and Digital Sky Technologies bought $500
million of stock, while Goldman Sachs offered $1
billion of shares to non-U.S. clients.