<![CDATA[NBC Bay Area - Facebook IPO]]> Copyright 2014 http://www.nbcbayarea.com/feature/facebook-ipo http://media.nbcbayarea.com/designimages/nbc_bayarea_blue.png NBC Bay Area http://www.nbcbayarea.com en-us Thu, 24 Apr 2014 08:36:11 -0700 Thu, 24 Apr 2014 08:36:11 -0700 NBC Owned Television Stations <![CDATA[Facebook Shares Open at $42.05, Close at $38.23]]> Fri, 18 May 2012 13:24:12 -0700 http://media.nbcbayarea.com/images/213*120/mark-zuckerberg.jpg

After much anticipation, Facebook's share price started selling at $42.05 on Friday at the NASDAQ in New York, but closed at $38.23.

The initial opening was about 10 percent higher than the $38 price set by Facebook per share on Thursday. And earlier on CNBC, analysts said the shares might sell anywhere between $42 and $45. The ticker will be "FB."

In the moments after the opening bell, the price dipped down to about $40. By 9 a.m., the price had dropped to $38. And by closing bell, just 23 cents more than that.

More than 505 million Facebook shares changed hands.

Early on Friday, and dressed in his trademark hoodie, Mark Zuckerberg rang a symbolic NASDAQ bell at 6:30 a.m. in Menlo Park from company headquarters.

The trading was delayed by 30 minutes Friday, because traders were having problems changing and canceling their orders, according to the Wall Street Journal.

CNBC's Jon Fortt compared it to having only one movie theater with lots of people cramming to see the opening of  "The Avengers."

Once the shares finally got going, more than 82 million were traded in the first 30 seconds of the company going live.

 

 



Photo Credit: AP]]>
<![CDATA[Facebook Shares Fall 13 Percent]]> Mon, 21 May 2012 11:02:18 -0700 http://media.nbcbayarea.com/images/213*120/facebook_nasdaq.jpg

Facebook suffered a crushing embarrassment Monday morning as the company’s stock fell far below the IPO price of $38.  While it’s hardly the first company to see huge share losses, it is easily one of the biggest and most watched.

“Facebook is like a nightclub where people are streaming out and telling everyone on the street not to pay the cover” opined CNBC’s Carl Quintanilla as he watched the share price move lower.

On Friday, underwriters, the institutions that purchased the shares directly from the company at the IPO and sold them to investors, rushed back in to repurchase the stock to help prop up the price.   

The big question is why Facebook shares have cratered so badly.  Underwriters blame the NASDAQ’s problems creating the first trades early Friday morning.   An executive for Knight Capital called it “the worst handling of an IPO by an exchange ever”.  However, as more time elapses between the NASDAQ’s technical hiccups, that explanation begins to weaken. 

Former Sun Microsystems CEO Scott McNealy wondered about Facebook's overall future: "When AOL hit, they owned the Internet...And beanie babies and Yahoo! and iTunes and Zynga and then Facebook. Each one is bigger and better. There will be others. It's not Metcalf's law or Moore's law, but in my view, things will go down."

 



Photo Credit: Getty Images]]>
<![CDATA[Zuckerberg Rings Nasdaq Bell]]> Fri, 18 May 2012 15:57:47 -0700 http://media.nbcbayarea.com/images/213*120/N6PFACEBOOKIPORESEND_6518553_722x406_18477134.jpg Mark Zuckerberg rings the Nasdaq's opening bell from Facebook's Menlo Park headquarters.]]> <![CDATA[Facebook IPO Crushes Zynga]]> Fri, 18 May 2012 09:34:01 -0700 http://media.nbcbayarea.com/images/178*120/3573105820_0e8ddc2633_b.jpg

One company anxiously awaiting Facebook's public debut was Zynga.

The San Francisco-based gaming company's revenue is intimately tied to Facebook since most of its virtual games are played on the social network.

Friday, just moments after Facebook went public, Zynga's stock took a nosedive and trading was halted.

The company's stock dropped 13 percent to $7.17 before being halted, possibly to prevent it from crashing under a "circuit breaker" protection.

Zynga CEO Mark Pincus had to be torn on the news. Going into Friday's IPO, Pincus owned an estimated $425 million worth of Facebook.

Pincus' company went public in December with a $10 billion valuation. It's stock has hovered around $10 for most of the time since its IPO.
 



Photo Credit: Joi Ito]]>
<![CDATA[Mark Zuckerberg Rings Facebook's Bell]]> Fri, 18 May 2012 08:13:54 -0700 http://media.nbcbayarea.com/images/181*120/131735841.jpg

Wearing his trademark hoodie, Mark Zuckerberg showed up to Facebook's Menlo Park headquarters around 6 a.m. Friday.

The social network's co-founder and CEO was preparing to usher in the new public era of Facebook, when the company begins selling shares on the NASDAQ under the symbol "FB."

The NASDAQ set up a special area at Facebook HQ for Zuckerberg to ring the ceremonial bell remotely.

Employees lined up around a makeshift stage and a jumbo-tron in the center of campus hours before the 28-year-old rang the bell.

Zuckerberg was joined on stage by Facebook COO Sheryl Sandberg, who warmed the crowd up before giving way for the company's young CEO to act out the ceremonial opening. 

He rang the bell at 6:30 a.m. Facebook stock is expected to begin trading around 8 a.m. Friday.



Photo Credit: Getty Images]]>
<![CDATA[Facebook Has Big Plans for Its Big Cash]]> Fri, 18 May 2012 06:28:53 -0700 http://media.nbcbayarea.com/images/176*120/142610766.jpg

Facebook is expected to end Friday with up to $18 billion in hand.

So what will the Menlo Park-based social-networking site do with all that new found cash? A lot of what it has already been doing, according to experts.

The company's shares are set to begin selling at $38 a piece around 8 a.m. Friday, which is expected to raise between $16 and $18 billion and give the company a valuation over $104 billion.

The share price will give Facebook one of the largest cash reserves of any public company that is not a bank.

Analysts believe Facebook will invest at least some of that cash back into the company by buying products, patents and other companies.

Facebook started the shopping early.

Earlier this month it purchased photo-sharing app Instagram for $1 billion. And it spent another $550 million last April to acquire patents from AOL.

Analysts also believe the company will invest in hiring more people and identifying talent early -- in part to continue its social media dominance.
 



Photo Credit: Getty Images]]>
<![CDATA[Facebook IPO to Make Bono the World's Richest Rocker]]> Fri, 18 May 2012 05:51:45 -0700 http://media.nbcbayarea.com/images/213*120/U2_bono+resized.jpg

Chances are U2 front man Bono doesn't need any cash but that doesn't mean Friday won't be a beautiful day for the singer.

When Facebook begins selling shares of its social network to the public, Bono will become the richest rocker in the world.

The Irish singer owns about 2.3 percent of the company through his investment group Elevation Partners.

Bono's firm bought $90 million worth of Facebook shares in 2009 on the secondary market. His shares could now be worth more than $1.5 billion.

If the estimates are accurate, Bono would surpass Beatles great Paul McCartney who is believed to be worth about $1.05 billion.

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<![CDATA[FB IPO Shares Tough Buy For Small Investors]]> Thu, 17 May 2012 11:36:49 -0700 http://media.nbcbayarea.com/images/180*120/141311978.jpg

Hoping to get in on Facebook's hotly anticipated public stock offering? You'll need Facebook friends at very high levels or a lot of money.

 Most people who like the idea of owning Facebook's stock will have difficulty getting it at the offer price, currently expected at $28 to $35 a share. Unless you know the right people at Facebook, you'll likely need to have a large, active account with one of the big banks or brokerage firms directly involved in the stock sale.

 Otherwise, you can take your chances by buying shares after the initial public offering is completed, when Facebook begins trading on the Nasdaq Stock Market under the ticker symbol "FB.'' That's likely to happen Friday.

 Doing it that way typically means paying much more for the stock, however. And heavy demand skews the early stock price, leaving an investor vulnerable to the risk of a big drop.

 Jerome Cleary isn't deterred. One of a legion of Facebook fans, he has never wanted to own a stock as much as he wants to buy this one. Cleary, a standup comedian in Los Angeles, says he has already signed up for an account with a discount online brokerage so he'll be ready.

 "I know you should buy stock in what you know and like,'' Cleary says. "I feel that because they have an incredible mass of wealth and such growing popularity, the stock really may pay off.''

 Facebook Inc.'s IPO is expected to be the largest ever for an Internet company. It's expected to raise as much as $11.8 billion for Facebook and its early investors far more than the $1.67 billion raised in Google Inc.'s 2004 IPO.

 Analysts say there's so much interest in Facebook's stock that some underwriters are closing their books as early as Tuesday. This means they won't be taking any more orders from potential buyers. The IPO is expected to be completed late Thursday, with shares available for trading Friday.

 Scott Sweet, the owner of advisory firm IPOBoutique, says the high demand also means that Facebook might raise the per-share price above $35, the high end of the range Facebook currently expects. Facebook and the IPO's lead underwriter, Morgan Stanley, declined to comment.

 If you're thinking of investing in Facebook, here are some things to consider.

  IPO SHARES

 Facebook and its early investors are selling more than 337 million shares, but those shares are parceled out very carefully, away from the public's eyes.

 Typically individuals get to buy no more than 10 percent to 20 percent of shares sold at an IPO's offering price. The vast majority will go to company insiders, institutional investors, the underwriters selected by the company to handle the process and preferred clients of all of them.

 Morgan Stanley leads the team of 33 underwriters selected for the Facebook offering, followed by JPMorgan Chase and Goldman Sachs.

 The inclusion of online broker E-Trade Financial Corp. as an underwriter was seen as a glimmer of hope that Facebook might make more shares available than usual for retail investors through discount brokerages. But chances of getting any are very slim regardless.

 ELIGIBILITY

 The big online brokerages have been taking formal requests from customers for Facebook's IPO. They anticipate they'll get their own allocations from one source or another, such as one of the underwriters. E-Trade, Fidelity Investments, Charles Schwab and TD Ameritrade, among others, have been fielding abundant queries.

 But the requirements they set on who gets them eliminate most small investors.

 Fidelity, which will be getting an undetermined number of shares from underwriter Deutsche Bank, says customers should have $500,000 in their accounts and have made 36 trades in the past year to be eligible. Ameritrade's account requirements are at least $250,000 and 30 trades in three months. Schwab's are a minimum $100,000 or 36 trades in the past year, but the firm says it also has other requirements.

 Even meeting the requirements is no guarantee of getting shares.

 Joshua Freeman, an information technology professional in New York, knows investing in Facebook is risky, but he believes ``it's got a pretty good shot to make some money.''

 He has been investing with E-Trade since the mid-1990s and has about $200,000 in his account. But he's pessimistic about his request for 100 Facebook shares at the IPO price, given the frenzy over the offering.

 "I'm hoping to get some but I'm guessing that I won't,'' Freeman says. ``I'm hoping it follows the trend and goes crazy and then dips a little bit. If it does that, I may buy some on the open market.''

 OPEN MARKET

 If you strike out as an insider, it will still be easy, but expensive, to buy shares on the open market. Open and fund an account with a brokerage. Then for a transaction fee of as little as $7, you can buy Facebook stock at whatever price the market demand has driven it.

 Be aware that the price could jump significantly by the time you place your order. Among last year's hottest IPOs, Groupon Inc. soared in the opening minutes and gained 31 percent on the first day of trading. Zillow Inc. jumped 79 percent and LinkedIn Corp. more than doubled.

 Investors buying on the open market miss much or perhaps all of any first-day ``pop.''

 The first-day market price of newly issued stocks during the past decade has been an average 11 percent higher than the offer price, according to University of Florida finance professor Jay Ritter.

 For investors buying at the offer price, Facebook is likely to produce a gain on the first day, he says. But once it starts trading, investors should think of it as just another stock that's as likely to go down as up.

 Consider this: Groupon, which went public at an IPO price of $20 six months ago, soared as high as $31.14 on the first day. It closed Monday at $11.73, 41 percent below the offer price.

 As for the idea of buying the stock at a low point a few months from now, Ritter says that has not worked historically as a reliable strategy with IPOs. And this one's starting at a very high price, he emphasizes, with optimistic expectations of future growth built into it.

 The only sure winners, he says, will be Facebook employees and venture capitalists who invested in the company when it was private.

 James Breyer and his Accel Partners firm, investors since 2005, stand to make up to $1.34 billion from the 38.2 million shares they are offering. Zynga Inc. CEO Mark Pincus, a Facebook investor since 2004, stands to make up to $35 million on 1 million shares.

 "The time to buy Facebook was five years ago,'' Ritter says.



Photo Credit: Getty Images]]>
<![CDATA[Facebook IPO 101]]> Fri, 18 May 2012 05:38:16 -0700 http://media.nbcbayarea.com/images/213*120/Mark-Zuckerberg-P2.jpg

Eight years after a Harvard student in a hoodie built a platform that more than 900 million call their digital home, Facebook is set to go live Friday.

The day will start at 6:30 a.m. with Facebook CEO and co-founder Mark Zuckerberg ringing the NASDAQ bell.

Then at 7 a.m. the madness will begin and up to 1,000 Facebook employees will become millionaires when the U.S. Securities and Exchange Commission has given clearance for traders to begin selling shares of the company under the ticker "FB."

It could take up to another two hours for shares to actually begin exchanging hands.

Shares are set to begin selling at $38 a share, which is expected to raise an estimated $16 billion and give it a valuation over $104 billion.

Zuckerberg is expected to have a personal fortune of over $20 billion when the stock goes live.

The offering is expected to be the largest tech IPO in history.



Photo Credit: Bloomberg via Getty Images]]>
<![CDATA[Here We Go: The Facebook IPO]]> Thu, 17 May 2012 12:00:34 -0700 http://media.nbcbayarea.com/images/171*120/126097400.jpg

After eight years, Facebook, born in a Harvard dorm room, is ready for the world.

The stock market world, that is.

Rarely has "going public" meant less to a company:  Most companies sell stock, and get discovered in the process.  Facebook is already pretty much the most public company in the world.  Their stock sales will make lots of people very, very wealthy.

The company is not going the traditional route, either - instead of opening the NASDAQ marketplace in New York, Facebookers -- led by CEO Mark Zuckerberg -- will ring a virtual NASDAQ bell on their Menlo Park campus.

It should be fun and we will be there live Friday tweeting and streaming live Qik video, which you can view right here.

Scott will report and tweet live from Facebook HQ.  You can follow updates on Twitter:  @scottbudman



Photo Credit: Getty Images]]>
<![CDATA[Facebook IPO: More Than 'Face' Value]]> Fri, 18 May 2012 05:28:28 -0700 http://media.nbcbayarea.com/images/213*120/FACEBOOKIPOHYPEPKG_6512978_722x406_18097779.jpg Facebook will soon be worth more than face value. The Menlo Park-based company is hoping to get a thumbs up from investors when its shares begin trading tomorrow. The social-networking giant is set to launch its initial public offering -- and it's looking for many 'likes' on Wall Street. NBC Bay Area's Jean Elle reports from Facebook headquarters on the Peninsula.]]> <![CDATA[Facebook Prices Shares at $38]]> Thu, 17 May 2012 14:22:50 -0700 http://media.nbcbayarea.com/images/179*120/1261060741.jpg

Facebook finalized the price for its share at $38 on Thursday in one of its final steps before going public less than 24 hours later.

CNBC first reported that the price was locked at $38. The network also reported that at the price Facebook CEO Mark Zuckerberg is instantly worth $20.3 billion.

The network also said Zuckerberg immediately plans to sell 30.2 million shares of Facebook worth $1.14 billion and use the money to buy more shares.

The Menlo Park-based social-networking company is largely expected to go public Friday. Shares were expected to be priced somewhere between the $34 to $38 range.

Earlier this week it was expected that Facebook's IPO price would be set lower, somewhere between $28 to $35, but the buzz around the company and reports that the IPO is already oversubscribed has pushed the projected price up.

Facebook also issued more shares Wednesday to keep up with the anticipated demand.

The company's valuation is expected to be between $93 billion to $104 billion under the new range.



Photo Credit: Getty Images]]>
<![CDATA[What We Don't Know About the FB IPO]]> Thu, 17 May 2012 16:21:37 -0700 http://media.nbcbayarea.com/images/184*120/137642298.jpg

For all the information you've read in the last few days (all of which include the key words "Harvard dorm room" and "hoodie") there are still things we supposed experts don't yet know.

1.  What's the plan for tomorrow?

We have every expectation that Mark Zuckerberg will open the NASDAQ Marketplace from Facebook headquarters in Menlo Park.  There is an enormous metal stage in the central courtyard.  However NASDAQ, which is normally very helpful with reporters, is being tightlipped about Friday's plans.

2.  What's the price?

Facebook will price its shares later this afternoon.  Note these are the shares rich investors and banks buy - they get them at between $34 to$38 (though we've heard rumors of higher) and then sell them to the you.  You can't buy until trading on the secondary market begins.

3.  Who is really in charge?

Facebook has two chiefs, notes David Weidner at the Wall Street Journal.  Mark Zuckerberg is the founder, but Cheryl Sandberg seems to run day to day operations.  And remember: she used to be chief of staff at the US Department of Treasury.  No hoodie on her.

4.   What about mobile?

Facebook isn't very good at making money, points out Miguel Helft and Jessi Hempel.   It's just so big, you don't notice.  The money that comes in is largely from advertising to Facebook users on traditional computers.  It has not succeeded in advertising on mobile. 

 Remember Scott McGrew's Second Rule of Facebook:  No one has figured out mobile, not even Google or Apple.
 



Photo Credit: Getty Images]]>
<![CDATA[Facebook Co-Founder Fires Back at Critics, Senators]]> Thu, 17 May 2012 16:20:48 -0700 http://media.nbcbayarea.com/images/213*120/Eduardo+Saverin.jpg

Facebook co-founder Eduardo Saverin is firing back at his critics on the day two U.S. senators introduced a bill to tax millionaire expatriate.

The Brazilian native, who has lived in Singapore since 2009, has come under fire this week after it was revealed that he renounced his American citizenship last year.

Some saw it as a move to avoid thousands in taxes. But in a letter to Forbes, Saverin said his move is being politicized and misunderstood.

"It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation," he wrote. "My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009,” Saverin said. “I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen."

Thursday, Democratic Senators Chuck Schumer and Bob Casey introduced the "Ex-PATRIOT" Act, which would imposes taxes on Americans with a net worth of more than $2 million or an average income tax liability of at least $148,000 over the last five years.

The expatriate would be given the opportunity to prove to the IRS that they are not renouncing their citizenship to save on taxes.

In his letter, Saverin said he planned to continue investing in American businesses in the future and that he always paid his taxes when he was an American citizen.

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<![CDATA[Goldman Sachs to Cash Out of Facebook]]> Thu, 17 May 2012 12:59:16 -0700 http://media.nbcbayarea.com/images/213*120/115068400.jpg

They got in. And now they're cashing in.

Goldman Sachs was an early investor in Facebook. And now with the technology company ready to go public, Goldman will be among the first to cash out, according to Bloomberg, ready to dump $1 billion in stock, or about half of the Wall Street investment bank's shares.

The bank and its accompanying funds will sell 28.7 million of the 65.9 million shares they own -- more than twice the amount initially planned -- Facebook said yesterday in a filing.

Goldman did so in a way that left both American shareholders and regulators out of the deal, Bloomberg reported: the company created a "special purpose vehicle" that allowed it to avoid U.S. Securities and Exchange Commission reporting requirements.

And then Goldman -- which both handles its own investment accounts to make money for itself as well as for its private and institutional investors -- canceled an offering of Facebook shares to U.S. investors "amid concern that “intense media attention” may violate rules limiting marketing of private securities," Bloomberg reported.

A spokesman for the bank declined to comment on the sale.

Of the 14.2 million shares that Goldman owns for its own investment accounts, it is selling off 6.18 million, according to the Facebook filing. That means a $210 million to $235 million profit on the deal.

For Facebook's overseas investors, whose shares are held by a Cayman Islands-based holding company, the payout is as much as $795 million, Bloomberg reported.

Some investors see this as Goldman cashing out while Facebook is still overvalued: a Bloomberg poll conducted a year ago found that 69 percent of Wall Street investors and analysts deemed the-then $50 billion valuation as too high. At $35 to $38 a share, the valuation is now over double that.



Photo Credit: Bloomberg via Getty Images]]>
<![CDATA[A Look at How Facebook Began]]> Thu, 17 May 2012 11:31:41 -0700 http://media.nbcbayarea.com/images/213*120/budmanfacebookliveforweb_65024941_722x406_2235549279.jpg With Facebook's IPO coming on Friday, NBC Bay Area's Business and Tech Reporter Scott Budman takes a look back on how Mark Zuckerberg put the tech juggernaut together from his Harvard dorm room.]]> <![CDATA[Facebook to Host All-Night Hackathon on IPO Eve]]> Thu, 17 May 2012 12:46:45 -0700 http://media.nbcbayarea.com/images/160*120/fbmenlopark.jpg

How does one celebrate the night before becoming a millionaire? If you're a Facebook employee, you participate in an all-night hackathon.

The Menlo Park social-networking company is largely expected to go public Friday in what could be the largest tech IPO ever.

Some reports suggest that upwards of 1,000 people could become overnight millionaires when Facebook shares begin trading on the NASDAQ.

Some of those millionaires will spend their last few hours as common people by participating in Hackathon 31 starting Thursday at 7 p.m. on Facebook's Menlo Park campus.

The event is open to employees only.

The event is scheduled to run until Facebook executives ring the opening bell early Friday morning.

Participants in Facebook's notorious hackathons are required to code whatever they like as long as it is not part of their normal day job.



Photo Credit: Facebook]]>
<![CDATA[FB Doesn't Own Its Most Important Patent]]> Thu, 17 May 2012 12:31:43 -0700 http://media.nbcbayarea.com/images/180*120/844950611.jpg

Facebook announced this week it could be "materially affected" by Yahoo's claims the company violates some Yahoo patents (read that as "we may have to pay Yahoo some money").

But the most important patent for Facebook isn't owed by Yahoo. It's not owned by Facebook either.

It's patent 6,175,831, titled "Method and apparatus for constructing a networking database and system" but commonly known as the "Six Degrees" patent.

While the language inside the patent is complicated ("wherein the configuration file specifies the format of the embed code and has a variable field into which the content ID is inserted") it can be described best as "the patent which allows you to connect with friends on the internet".

It's owned by Reid Hoffman and Mark Pincus. Fortunately for Facebook, they're allies of Facebook. Pincus runs Zynga, which depends on Facebook for much of its traffic and Hoffman is an investor in both Facebook and Zynga.

Pincus and Hoffman are longtime friends. Back in the turn of the 21st century, the pair joined Friendster founder Jonathan Abrams in a troika of social networking: Friendster would concentrate on friends and dating, Pincus and his company Tribes would target groups and get-togethers, and LinkedIn would concentrate on business networking.

Pincus and Hoffman would later buy a patent (notably excluding Abrams) to protect their fledgling businesses.

In the clip below, Hoffman describes trying to come up with the $700,000 to buy the patent:

View more videos at: http://nbcbayarea.com.



Photo Credit: Getty Images for Burda Media]]>
<![CDATA[Facebook Co-Founder Rejects US]]> Thu, 17 May 2012 12:29:39 -0700 http://media.nbcbayarea.com/images/213*120/Eduardo+Saverin.jpg

Eduardo Saverin -- the guy you feel sorry for in the movie "The Social Network" -- has renounced his American citizenship in order to save money on taxes, reports Bloomberg

Facebook founder Mark Zuckerberg may have famously shortchanged his Harvard schoolmate, but Saverin still owns at least 4 percent, according to Who Owns Facebook.

Saverin was born in Brazil but raised in Florida.  He moved to Singapore after founding Facebook where he lives quite well. 

"If you've watched 'Keeping Up with the Kardashians,' you know that a lot of the socializing happens in those laser-filled nightclubs offering bottle service. Local press reports, says Mahtani, have called Saverin one of 'Singapore's hottest partygoers,'" writes the Atlantic Wire.

Singapore does not have a capital gains tax and the move could save Saverin millions.

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<![CDATA[IPO FB Didn't Want Will Net What It Doesn't Need ]]> Thu, 17 May 2012 12:27:40 -0700 http://media.nbcbayarea.com/images/213*120/Mark-Zuckerberg-P1.jpg

Facebook will offer stock in an IPO the company never wanted, which will earn it billions of dollars it does not appear to need.  

In fact, much like Google, Facebook was not even originally created to be a company.  

"It was built to accomplish a social mission — to make the world more open and connected," founder and CEO Mark Zuckerberg warned in the company's  filing.  

Estimates put the IPO's value at $12 billion - though that number changes often.  That's $13 billion for a company that already has $3.9 billion cash on hand and is on track for net revenues of around a billion dollars per year. 

While it has  far less cash on hand than Apple or Google,  that's still an enormous pile of dollars it's not using and has no plans to use. 

"We do not currently have any specific uses of the net proceeds planned," says Facebook in the dry legalese of its financial filings. 

In fact, the company plans to invest the money in the least interesting way, by buying savings bonds: "Pending other uses, we intend to invest the proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash." 

Though of course Facebook didn't have any obvious plans to buy Instagram for a $1 billion.

So a company that didn’t want to be a company will raise money it doesn't need.  Why IPO at all? 
Turns out, it didn't necessarily want to do that either.  Many point to the "500 rule"  (see page 148)  as the cause behind Facebook's filing.  

"The rule mandates that once a private company has more than 500 investors, it must begin releasing quarterly financial information to the Securities and Exchange Commission, just as public companies do" explains CNBC reporter Kate Kelley. 

In June of last year, Facebook COO Sheryl Sandberg called the IPO "inevitable."   The 500 shareholder rule became even more problematic when Goldman Sachs received a chunk of Facebook insider shares and divided them up for resale. 

(One should note the 500 rule does not require a company to go public - rather it creates responsibilities and difficulties required of public companies.  Put another way, Facebook would get all the pain and none of the benefits - it might as well offer stock.)

Ironically, that requirement vanished with the passing of the recent JOBS Act.  "It's interesting to wonder", says Yammer CEO David Sacks. "If they would still be IPOing if that rule weren't around [at the time]."   See more of Sack's interview here

There are of course many reasons to offer shares beyond just making money:   Giving your investors a way to exit - a payout.  Giving your employees a reason to stick around and not jump ship to  a soon-to-IPO company.

The Facebook IPO may be the most anticipated since Google's first public offering.   It may even rival the excitement over Netscape.  However, it's also one of the most peculiar.



Photo Credit: Bloomberg via Getty Images]]>
<![CDATA[Zuck's Business Skills, Future Questioned]]> Thu, 17 May 2012 11:29:27 -0700 http://media.nbcbayarea.com/images/180*120/118503913.jpg

They read the stories. They saw the movie. They heard the IPO presentation. But they still have questions -- about the most important skill yet.

What's not known about Facebook CEO Mark Zuckerberg would not likely fill a very long book, with details of his managerial style, rise to riches, and personal life appearing in every conceivable form of media. But the 28-year old billionaire's business acumen is still unproven, according to Wall Street investors and analysts -- and with Facebook's corporate structure organized so that Zuckerberg owns an unassailable 55.8 percent of the company's stock, nobody can force him out, even if the company stumbles after its much-heralded IPO this week, the Chronicle reported.

The problem, as investors see it, is the track record with founders remaining as CEOs well into a company's lifespan. Yes, Zuckerberg oversaw Facebook's rise from a Web site run from his dorm room into a global firm with almost a billion users and thousands of employees. But he did this using the corporate motto of "Move fast and break things," the newspaper observed. That could also mean "take big risks and lose big money" down the road.

Take Zuckerberg's $1 billion grab of Instagram, for example. In other firms, pressure from investors who could throw the CEO out might temper the urge to make such risky moves. Not so with Facebook, where the founder rules.

And why not? Thus far, he's made the right moves, observers say, from growing at the right pace to hiring the right people to run divisions of the company. And until he sells off, it's Zuckerberg's ride: would-be stockholders are just passengers.



Photo Credit: Getty Images]]>
<![CDATA[Raw Video: Box's Aaron Levie Talks IPO, More]]> Thu, 17 May 2012 11:34:50 -0700 http://media.nbcbayarea.com/images/186*120/2012-01-06-AaronLevie.jpg With Facebook getting ready to go public as early as this week could Box.net be the next big IPO.]]> <![CDATA[Students Plan to Buy Share of Facebook]]> Thu, 17 May 2012 11:30:14 -0700 http://media.nbcbayarea.com/images/213*120/Facebook-Share-Local-Class.jpg

Facebook is selling the first stock of its company on Friday and a group of students wants to be the first to buy a piece.

The students are a part of a non-profit investment club at Grossmont High School that studies financial news and trends.

The group also makes purchases and trades of stocks using money donated to the club.

When the club heard Facebook was going on the market, they voted unanimously to buy it. The club's plan is to buy up to four shares Friday morning, then sell half of the stocks later in the afternoon.

“It’s a great experience whether we make money or lose money because these students are learning about finances and making their money work for them,” said the club’s teacher Todd Benrud.

The group is planning to meet at 6:30 a.m. when the market opens to starting buying their shares.
Facebook's debut share price is expected to be between 28 and 35 dollars.

If the club makes any gains on their stock portfolio, they plan to give 50 percent back to their campus in the form of student scholarships and teacher grants.

“Hopefully the skills they learn will carry on to their college and careers. A lot of these kids don’t have a bright future now but hopefully this will make their futures a bit brighter.”

If you are interested in donating to the club's educational fund, you can visit the club’s website.

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<![CDATA[What the Tech? Is Facebook a Fad?]]> Thu, 17 May 2012 11:37:43 -0700 http://media.nbcbayarea.com/images/213*120/facebook_sign.jpg The Associated Press recently conducted a survey asking if people think Facebook is just a fad. NBC10's Vince Lattanzio shares the results.]]> <![CDATA[Facebook to Buy Instagram for $1B]]> Thu, 17 May 2012 12:12:12 -0700 http://media.nbcbayarea.com/images/213*120/138046919_facebook.jpg

Just breaking:  Facebook, said to be buying photo app Instagram for a billion dollars.

Instagram is well-liked, and used all the time.  Heck, the guy who started it was in the First Lady's box during the Presidential State of the Union address.

But a billion dollars?

Wow.  We're back in 1999, aren't we?

Facebook is reportedly paying cash and stock for the San Francisco-based Instagram. The deal is expected to close in June.

If you aren't familiar with Instagram, it lets people apply filters to photos and share them with friends and strangers. Some of the more popular filters make the photos look as if they've been taken in the 1970s or on Polaroid cameras.

"This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users,'' CEO Mark Zuckerberg wrote on his Facebook page. "We don't plan on doing many more of these, if any at all."

Scott loves the big deals.  He’s on Twitter:  @scottbudman

Here's how CNBC reported the news:



Photo Credit: Getty Images]]>
<![CDATA[Facebook IPO Inspires a Musical]]> Thu, 17 May 2012 11:10:33 -0700 http://media.nbcbayarea.com/images/213*120/zuckerberg-the-musical.jpg

CNBC has its guess the closing bell game and now those who want to enjoy Friday's Facebook IPO can sing-a-long with a catchy tune.

The public sell off of the Menlo Park-based social network has inspired a musical.

CDZA, a collective that creates "musical video experiments," put together a three-minute spoof on the history of Facebook ending with its much-anticipated IPO Friday.

While celebrating the storied history of the world's most popular social network, the singers also pay homage to several Broadway classics, such as "Cats," "Les Misreables," "Hair," "Rent," and more.

"Zuckerberg: the Musical" is available on a YouTube channel near you. There are no reports of turning it into a full blown play just yet.

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<![CDATA[Woodside Estate for Sale Ahead of FB IPO]]> Thu, 17 May 2012 11:25:44 -0700 http://media.nbcbayarea.com/images/213*120/woodside-estate.jpg

Facebook will create up to 1,000 new millionaires come Friday.

For those elite few desperately looking for ways to spend their new fortune, may we suggest buying a home built with old money.

A rare 12,951-square-foot French chateau in Woodside is set to hit the auction block on June 14.

The property is in fact so rare that some of those grown-up IPO babies living in Woodside have used a slice of their fortune to help pass ordinances that will not allow a home so large from being built in their backyard ever again. And yes, their backyards are that big.

The new Facebook millionaires can purchase the property before it goes to auction for $12.95 million.

The buyer will also be fulfilling the tech stereotype by buying into a city already so famous with Silicon Valley elite.

Think Larry Ellison, John Thompson, Thomas Siebal and Scott Cook. And to add to the cool factor, let's throw in the fact that Neil Young and Michelle Pfeiffer and her husband David Kelley call Woodside home.

Plus the house is only an 8.9 mile drive to Facebook's new Menlo Park headquarters. The drive takes about 20 minute in traffic, according at least to the last tech IPO to cause such a stir -- Google.

"Rich in history, this masterpiece was built in the 1920s and is so magnificent and grand that if you wanted to build a house this size today, you wouldn’t be able to because of today’s Woodside regulations," real estate agent Mary Gullixson said, who listed the property.

The home is built on five acres and it has five wings with an 11,000-square-foot main home.

The mansion has seven bedrooms, seven full- and two-half bathrooms, garden and morning rooms, a ballroom with fireplace, a banquet-sized dining room, a wine cellar with tasting bar, a billiards room and a library. Outdoors, there are two gated entrances, vast lawns, parterre gardens, a croquet lawn, vineyards and terraces, a pool, a spa, a gated tennis court and garage space for nine cars.

The starting bid is $7.9 million -- or just pennies for the CEO of a $100 billion company.

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<![CDATA[Guess Facebook's Closing Price]]> Thu, 17 May 2012 11:08:40 -0700 http://media.nbcbayarea.com/images/198*120/mark-zuckerberg-young.jpg

The fact that Facebook's initial public offering is turning out to be a not so public affair after all has many sitting on the sidelines wondering how they can be involved.

The Menlo Park-based social-networking site is largely expected to begin selling shares of the company on the NASDAQ this Friday but most, if not all, of the stock expected to hit the market will not be available to the general public.

Instead a piece of the action behind the largest tech IPO ever is reserved for elite traders only.

But not anymore thanks to CNBC's Facebook IPO game.

NBC's sister financial network is showing of its stock geekiness with a Facebook game where anyone can guess what the company's closing price will be on the first day it trades on the open market.

Winners will be given an undisclosed prize and will have their name read live on air during CNBC's "Closing Bell" show on May 18th.

The game is taking entries right now -- no elite status required.

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<![CDATA[Facebook Goes Public]]> Fri, 18 May 2012 09:44:35 -0700 http://media.nbcbayarea.com/images/190*120/facebook+opening+bell.jpeg ]]>