Facebook frenzy is spreading ahead of the
company's big-time stock market debut, with anything from Mark
Zuckerberg's hoodie to the billion-dollar buy of Instagram sparking
controversy.
Speculation about the promise or pitfalls of
owning a piece of the world's leading social network was so feverish by
the weekend that one report contended there was too much demand for the
stock while another said it was lacking.
Facebook, already assured of becoming one of
the most valuable US firms when it goes public, has been on an intense
marketing drive ahead of its expected trading launch on the tech-heavy
Nasdaq on May 18.
In a filing with the US Securities and
Exchange Commission, Facebook set a price range of $28 to $35 for its
shares, which would value the firm at between $70 billion and $87.5
billion.
When Google went public in 2004, its valuation was $23 billion, and now it has a market value of $200 billion.
Some are offended by the price set for
Facebook, a site founded by Zuckerberg just eight years ago from his
Harvard dorm room. Still only 27, he will retain 57.3 percent of the
voting power of the shares.
Others expected better -- some analysts
predicted a price of $44 a share in the short term, and a much higher
figure in the long term.
At the midpoint of the price range, the sale
of 337 million shares would generate $10.6 billion, making Facebook's
offering the largest IPO of a tech firm.
Despite the intense spotlight on Facebook
coffers swelling with a stock sale, analysts agree that for most of the
social network's more than 900 million users, the focus will be on
changes to the service -- not ownership of the firm.
"What they hope, I think, is that Facebook
will continue to innovate and make the service more interesting and more
relevant," said Creative Strategies principal analyst Tim Bajarin.
"Facebook is not extremely specific on what they will do with the money."
The IPO also means wealth will be heaped on longtime employees compensated with stock at the startup launched in 2004.
"You give a group of people in a company a
ton of money, you get some weird behavior," said independent Silicon
Valley analyst Rob Enderle of Enderle Group.
"Facebook itself is going to change, and not necessarily for the better."
Workers made rich with company stock have
been known to leave for new endeavors or to follow dreams. Sudden wealth
can change people's attitudes or inspire spending binges, Enderle
noted.
"A lot of stuff unrelated to work happens
that can lead to turmoil," Enderle said. "It is going to be an
interesting few months. Already Zuckerberg is acting outside the
envelope."
Zuckerberg was bashed by some analysts for
wearing his trademark hoodie and jeans to pre-IPO roadshow meetings with
Wall Street types accustomed to business attire.
"Showing up in front of suited financial
analysts in a hoodie is not the smartest thing," Enderle said. "It just
pisses off people who can wreck your IPO."
Zuckerberg was also second-guessed for
orchestrating a billion-dollar stock-and-cash deal to buy the startup
behind hot smartphone photo-sharing application Instagram.
The price tag evidently caught the attention
of the US Federal Trade Commission (FTC), which is reported to be
reviewing the takeover. Facebook declined to comment regarding an FTC
probe of the Instagram deal.
Companies going public usually wait until takeovers are completed to spare investors uncertainty.
Becoming a publicly traded company could
result in Zuckerberg being more constrained because of accountability to
stockholders and regulators, according to Bajarin.
"To be fair, once you go public you have
fiduciary responsibilities and are in a different scenario," Bajarin
said. "(Zuckerberg) could never do that Instagram deal for a billion
dollars like that after an IPO."
Facebook has kept busy in the weeks leading up to the IPO.
The social network unveiled an online center
for smartphone applications synched to Facebook and bought mobile
discovery startup Glancee. Microsoft announced it is weaving feedback
from Facebook friends into personalized Bing search results.
Facebook confirmed Friday it was creeping
into the territory of Dropbox, Google and others with the roll-out of a
service that lets people store files in the Internet "cloud" for access
from a variety of devices.
"Facebook wants to create an open social
network that allows them to get more aggressive in the way they connect
people," Bajarin said.
"Mark wants Facebook connected to all kinds of other sites, and this new model can be backed with more cash."
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