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Agile Computing: Article

Facebook Files To Go Public

With the IPO and a $100 billion valuation Zuckerberg's stake could be worth an estimated $28 billion

Facebook put in its papers to IPO after the market closed Wednesday, as expected. The S1 runs 200 pages.

It’s supposedly looking to raise $5 billion, not the $10 billion expected, although that could change back to $10 billion by the end of this exercise. What tiny percentage of the company $5 billion or $10 billion might represent is unclear.

The company is still valued at somewhere between $75 billion and $100 billion.

Late last week, when reports of the impending S1 started circulating, PrivCo claimed that Facebook was targeting an IPO price of $38-$40 for its shares, with a target value for the company of $90 billion-$95 billion because Facebook was “reluctant to aim for the full $100 billion valuation in the hope of leaving some value for investors following the listing.”

Young Mark Zuckerberg, Facebook’s 27-year-old founder and CEO, retains 57% voting control over the company by dint of his special Class B stock, like Google founders Larry Page and Sergey Brin do. In the case of his untimely death, the position will pass to his designated successor.

Facebook, whose ticker symbol will be FB, is expected to go public in Q2.

That probably means May, so stockholders who might be immediately restricted from selling the stock can still dump it before the Bush tax cuts become history.

Facebook now has to worry about a macroeconomic cloud like Greece defaulting raining on its parade. Greece will owe a payment on its debt then.

The S1 revealed that Facebook has 483 million daily active users, up 48% year-over-year; 845 million a month, up 39%.

Facebook made $1 billion last year, up 65%, on revenues of $3.71 billion, up 88% from $1.97 billion in 2010, but light about half-a-billion dollar by some expectations.

Zynga, the game company, accounted for 12% of revenue. Advertising brought in 85% of the revenue, up 69% year-over-year. Price per ad was up 18%, a factor attributed to advertisers’ ability to target and user interaction with the ads. Facebook has yet to attract the brand name national advertisers and the opposite side of the targeting coin is Facebook’s perennial privacy issues.

Gross margin was 47%.

Ten percent of revenues went to R&D and 11.5% to marketing. (So much for viral.)

In a letter to potential shareholders, Zuckerberg said he plans to continue focusing on building products, rather than revenue growth. “We don’t build services to make money; we make money to build better services. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”

Morgan Stanley will take the company out with Goldman Sachs, which orchestrated a sloppy $1.5 billion private placement of Facebook shares a year ago, getting a piece of the action along with JP Morgan, Merrill Lynch, Barclays and Allen & Co.

The placement Goldman did valued Facebook at $50 billion. After that deal went down TechCrunch figured Facebook had raised a total of $2.34 billion.

The social networking firm basically has to go public. It already has so many shareholders it would have to start reporting like a public company April 30 anyway. It might as well get the money.

Google went public in 2004 valued at $23 billion, raising $1.9 billion. It’s on record as the largest US Internet IPO till now. That was the year Mark Zuckerberg started Facebook in his Harvard dorm room. With the IPO and a $100 billion valuation his stake could be worth an estimated $28 billion. He made $1.5 million last year and will only take a $1 salary this year.

Yahoo offered to buy Facebook for $1 billion cash four years ago. Facebook’s revenues last year were ~$600 million less than Yahoo’s. Google, probably Facebook’s prime competitor along with Twitter, brought in $37.9 billion last year.

FB will reportedly be a New York Stock Exchange stock, relatively unusual for a tech.

Sec.gov crashed under the weight of punters looking for the S1. CNBC said it’s got the filing up at cnbc.com.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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