Feeds

Facebook lowballs on initial IPO price

Let a thousand bubbles bloom

Intelligent flash storage arrays

Facebook has filed its initial documents for the most anticipated social networking IPO of the current bubble, surprising some with a lowish estimate of $77bn to $96bn for the company.

Shares in the company will be traded under the moniker of FB and are expected to go for between $28 and $35 a share, with an initial stake of 337.4 million shares up for grabs, worth around $13bn. This makes it the biggest IPO since Google but, like Page and Brin, Mark Zuckerberg is making sure he keeps control of his progeny – while ensuring that employees and early investors can cash out.

"Mr. Zuckerberg, who after our initial public offering will control approximately 57.3 per cent of the voting power of our outstanding capital stock, will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors, as well as the overall management and direction of our company," the SEC filing reads.

Zuckerberg has been taking a personal interest in the company's M&A strategy, apparently masterminding the recent $1bn acquisition of Instagram and approving the purchase and licensing of a major patent bundle from Microsoft. The bulk of his share sales will go to offsetting his tax burden from the IPO.

Going low on price may be a smart move for the company, given the rather disappointing results from last week's financial data. Facebook's profits fell in respect to the opposition, and there are also lingering fears that the company might be part of a social networking bubble, but money managers are keen to pile into almost anything in the sector, as the recent Groupon IPO showed.

The filing documents also made it clear that Facebook's fortunes are very closely allied to those of Zynga. The gaming company has its own share issues and Facebook's filings say Zynga has control of over a tenth of its revenues.

"In 2011 and the first quarter of 2012, we estimate that up to 19 per cent and 15 per cent of our revenue, respectively, was derived from Payments processing fees from Zynga, direct advertising from Zynga, and revenue from third parties for ads shown on pages generated by Zynga apps," Facebook said.

All eyes will now turn to Facebook's forthcoming roadshow to investors to see if buyers are convinced that Facebook can continue the growth needed to justify its valuation. With its North American and European user base reaching maximum limits the company will have to look east to continue its hegemony, and despite Zuckerberg's overtures to China, that market is still locked down. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Go beyond APM with real-time IT operations analytics
How IT operations teams can harness the wealth of wire data already flowing through their environment for real-time operational intelligence.
The total economic impact of Druva inSync
Examining the ROI enterprises may realize by implementing inSync, as they look to improve backup and recovery of endpoint data in a cost-effective manner.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.