Facebook IPO likely to rank company among world's largest
奥丑别苍听Facebook聽makes its long-expected debut as a public company this spring, the social-networking company will likely vault into the ranks of the largest public companies in the world, alongside McDonald's, Amazon.com and Bank of America.
The Wall Street Journal reported Friday that聽Facebook聽is preparing to file initial paperwork for an offering that could raise as much as $10 billion and value the company at $75 billion to $100 billion. The filing with the Securities and Exchange Commission could come as early as Wednesday, with an initial public offering of stock in three or four months.
The targeted amount would slot it among the world's 25 largest聽IPOs, although as recently as November 2010, General Motors raised $15.8 billion when it shed majority control by the U.S. government.
The聽IPOs聽of 14 companies would rank higher than聽Facebook's, according to investment adviser Renaissance Capital. Among them were Visa Inc.'s $17.9 billion聽IPO聽in March 2008, the largest for a U.S. company, and world-topper Agricultural Bank of China Ltd., which raised $19.3 billion in July 2010, not including extra shares issued to meet demand.
Facebook聽spokesman Larry Wu said the company will not comment on IPO-related speculation. The Journal had cited unnamed people familiar with the matter.
The Journal also said that聽Facebook聽was close to picking Morgan Stanley as the lead underwriter, which would be a setback for rival Goldman Sachs. Both declined comment to The Associated Press.
The buzz surrounding an outsized haul for聽Facebook's聽founders, employees and early investors remains a hopeful sign for capital markets following a deep recession. At the reported price,聽Facebook's聽IPO聽would be the biggest for a U.S. Internet company ever 鈥� topping the debut of one of its main rivals, Google Inc.
"We are expecting 2012 to be a year of recovery for the聽IPO聽market led by the聽Facebook聽IPO," said Kathy Smith, Renaissance Capital's principal.
The event will follow a string of tepid debuts by technology startups including social game maker Zynga and discount advertiser Groupon. The stocks of both companies are just pennies above their offering prices in December and November respectively. Zynga's stock fell 5 percent below the聽IPO聽price on its first day of trading.
Facebook's聽will be the most anticipated tech聽IPO聽since Google went public in August 2004. Not including shares sold by early investors, the Internet search giant raised $1.2 billion and grabbed a market value of $23 billion, the biggest so far for a U.S. Internet company. The聽IPO聽raised $1.9 billion, including shares sold by early investors and extra stock issued to meet the heavy demand. It's not known whether聽Facebook's聽$10 billion target includes shares owned by early investors.
Facebook's聽reported valuation of $75 billion to $100 billion compares with about $100 billion for McDonald's Corp., $90 billion for Citigroup Inc. and Amazon.com Inc. and $75 billion for Bank of America Corp. It would exceed the market cap of $55 billion for Hewlett-Packard Co., one of the world's largest technology companies by revenue.
Both聽Facebook聽and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.
According to eMarketer,聽Facebook聽is expected to grow its share of the U.S. display ad market to about 20 percent this year from 16 percent in 2011, above second-ranked Yahoo's expected share of about 13 percent. For overall online ad revenue,聽Facebook聽is seen grabbing just 8 percent of the market this year, compared with 45 percent for Google.
EMarketer estimates that聽Facebook's聽ad revenue will grow 52 percent to $5.78 billion this year and will reach $7 billion in 2013.
Despite presumably topping Google's public launch,聽Facebook聽spent more time growing behind the veil of private ownership than its rival.
Facebook聽was founded by Mark Zuckerberg and his college roommates in 2004 and is debuting on stock markets in its eighth year. Google's聽IPOcame six years after being founded by Larry Page and Sergey Brin. When Google turned eight in August 2006, its market cap was roughly $116 billion. Today, the company is worth nearly $190 billion 鈥� down from a peak of about $235 billion in November 2007.
Investors may be asked to bet heavily on the belief that聽Facebook聽will continue to revolutionize the way people communicate around the globe. Even with聽Facebook's聽heady growth rate, Google had ad revenue last year of more than five times what聽Facebook聽is expected to get in 2013. Yet it is Google that is mimicking聽Facebook聽in building a rival social network called Plus.
"There's the general feeling that聽Facebook聽might be the future of the way the Internet works," said eMarketer analyst Debra Aho Williamson.
Zuckerberg, 27, is already worth $17.5 billion, based on the latest estimates from Forbes magazine. Most of that wealth is drawn from the value of聽Facebook聽shares that have traded among a small universe of well-heeled investors that buy stakes in companies before they go public.
As the company gauges public demand for its stock, the number of shares offered and the price asked could change significantly. Groupon had to refile its securities paperwork repeatedly as regulators questioned some of its accounting methods. Even Google took in less than it hoped as people shunned an unorthodox auction-based offering.
John Fitzgibbon Jr., publisher of IPOScoop.com, said it's too early to get excited.
"Until they actually put the ink on the paper and push it across the desk of the SEC, it's all speculation," he said.
The possible filing next week isn't all that surprising.
Federal rules require companies with at least $10 million in assets and more than 500 shareholders to disclose its quarterly financial results and other details. The reporting requirement kicks in 120 days after the fiscal year in which a company exceeds the shareholder threshold for the first time.
Facebook's聽fiscal year ends Dec. 31, so it has until late April 2012 to comply with this requirement, having hit the 500-shareholder threshold last year. Because it typically takes three or four months after filing paperwork to issue the聽IPO, a Wednesday filing would allow it to meet the deadline. If it happens in May, it could become a lucrative birthday gift for Zuckerberg, who will turn 28 that month.
