Facebook seeks to raise $5 bn in initial public offering

Published: February 2, 2012
Facebook's $5 billion fund-raising target only preliminary, can be increased based on investor interest in company. PHOTO: REUTERS/FILE

Facebook's $5 billion fund-raising target only preliminary, can be increased based on investor interest in company. PHOTO: REUTERS/FILE

WASHINGTON: Giant social network Facebook filed paperwork to go public on Wednesday, seeking to raise $5 billion on Wall Street in the largest flotation ever by an Internet company.

The filing with the US Securities and Exchange Commission provided a glimpse at the financial details of the Internet phenomenon launched eight years ago by chief executive Mark Zuckerberg from his Harvard University dorm room.

Facebook said it will list on Wall Street as “FB” but did not set a date for when it would begin trading.

The Palo Alto, California-based company reported net income of $668 million last year, up from $372 million the previous year. Revenue nearly doubled to $3.7 billion in 2011 over the previous year.

Facebook said it currently had 845 million users including 483 million active daily users.

At $5 billion, Facebook’s Initial Public Offering (IPO) would be the largest ever by a technology company, eclipsing the $1.9 billion raised by Internet search giant Google when it went public in 2004 at a valuation of $23 billion.

Facebook’s value has been estimated at $75 billion and $100 billion.

A market capitalization of $100 billion would put Facebook on a par with McDonald’s ($101 billion), well ahead of Boeing ($55 billion) but behind Apple ($426 billion) and Google ($189 billion).

Facebook’s $5 billion fund-raising target is only preliminary and can be increased based on investor interest in the company.

Facebook is the leading social network in all but six countries, notably Russia, where local rivals are preferred, and China, where it is banned.

In a letter to investors accompanying the SEC filing, Zuckerberg said Facebook “was not originally created to be a company.”

“It was built to accomplish a social mission — to make the world more open and connected,” he said.

“We think it’s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do,” he said.

“There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future,” he said.

“We believe this is the most important problem we can focus on,” the Facebook CEO said.

Zuckerberg, whose net worth has been estimated at $17.5 billion by Forbes magazine, is the largest individual shareholder in Facebook.

Gartner technology analyst Michael Gartenberg said he did not expect Facebook’s stock market debut to have much of an impact on the average user although the extra cash would allow it to roll out more features.

“Facebook going public doesn’t have that much implication for the vast majority of Facebook users unless they plan on buying shares — when they can finally get their hands on them,” Gartenberg said.

“Google didn’t change for users for the most part when it became public,” he said. “It grew. It expanded out to other services.”

Gartenberg said Facebook’s IPO would be the largest by a technology company in 2012 by far but others will be closely watching how it fares.

Career-oriented social network LinkedIn went public in 2011 and promptly doubled its value. Online daily deals site Groupon and social games titan Zynga, however, have both been trading mostly at or below their list price.

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