Facebook may finally go public in 2012
02 January 2012, 10:24
New York - Facebook co-founder and chief executive Mark Zuckerberg
has deflected talk of going public for years but it looks like it is
finally going to happen in 2012.
"The Facebook IPO will be the
biggest financial event in the tech industry for 2012," Forrester
Research analyst Josh Bernoff said, and one of the biggest initial
public offerings ever in the United States.
Nick Einhorn, an
analyst at Renaissance Capital, said he expects Facebook to file its IPO
paperwork with the US Securities and Exchange Commission (SEC) in the
first quarter and start trading on Wall Street later in the year.
an expected deal size of $10bn, Facebook would slip into sixth place on
the list of largest US IPOs between AT&T Wireless Group ($10.62bn)
and Kraft Foods ($8.68 billion), according to Renaissance Capital.
market capitalisation of $100bn would put Facebook on a par with
McDonald's ($103bn), well ahead of Boeing ($54bn) but behind Apple
($376bn) and another internet giant, Google ($209bn).
current annual revenue, mostly from online advertising, is estimated to
be around $5bn compared to $108bn for Apple and $36bn for Google.
the social network giant will be difficult, Einhorn said, just as it
was for several other internet companies that went public in 2011.
social network LinkedIn was undervalued while online daily deals site
Groupon and social games titan Zynga have both been trading at or below
their list price.
"I think Facebook is still a fairly young
company in a lot of ways," Einhorn said. "But it's certainly
established, and it's a significant company. Investors will recognise
Zuckerberg, who co-founded Facebook in his Harvard
University dorm room eight years ago and has seen it grow to more than
800 million members, recently seemed to bow to the inevitability of
In an interview with Charlie Rose of PBS television,
Zuckerberg said an IPO was "not something I spend a lot of time on a
day-to-day basis thinking about".
But, he added, "a big part of
being a technology company is getting the best engineers and designers
and talented people around the world.
"And one of the ways that
you can do that is you compensate people with equity or options,"
Zuckerberg said. "At some point we're going to make that equity worth
something publicly and liquidly."
Bernoff said that for Facebook,
going public is less about raising funds - the Gawker website reported
that Facebook had $3.5bn in cash on hand at the end of September - than
it is for "respectability".
"The purpose of this IPO is not so
much to raise revenue, as it is to put Facebook in a position where it
is seen as a public company, one that reports its financial results, and
does all the other things that public companies do," he said.
Forrester Research analyst said he does not expect going public to
shake up the innovative culture of a company which has said it plans to
hire thousands more employees over the next year.
"You can bet
that the strategy from the top will continue to come from Zuckerberg,"
Bernoff said. "And in contrast to a few years ago, he's shown a lot more
maturity in the way that he presents himself.
surrounded himself with very good people to manage the company and that
helps," he said. "I think that if you look out four years from now
Zuckerberg will still be the CEO.
"The managers around him might
shift some, but his position there is similar to Bill Gates's position
at Microsoft," he said. "And that lasted a very long time."