SAN FRANCISCO--Facebook took the first step toward public markets in the year's most highly anticipated IPO, which could catapult co-founder Mark Zuckerberg into sixth place among the world's richest people.
The world's largest social network, a dorm room project for
Harvard dropout Mark Zuckerberg that exploded in popularity and
vaulted to Silicon Valley's top tier within 8 years, is
expected to make its market debut in the middle of the year. It
could raise much more than the $5 billion initially targeted,
and value Facebook at up to $100 billion.
The company, which some investors fear may have peaked
in terms of growth, now has 845 million users. Revenue in 2011
was $3.71 billion, up 88 percent from the previous year but at
the low end of expectations. Net income rose 65 percent to $1
billion.
The long-awaited filing on Wednesday for an initial public
offering kicks off a months-long process that will culminate in
Silicon Valley's biggest coming-out party since the heyday of
the dotcom boom and bust.
Facebook appointed Morgan Stanley, Goldman Sachs and JPMorgan its lead underwriters. Other bookrunners included Bank of America Merrill Lynch,
Barclays Capital and Allen & Co.
"We often talk about inventions like the printing press and the television," Zuckerberg said in a letter accompanying the documents. "Today, our society has reached another tipping point."
"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," said Zuckerberg, whose $500,000 base salary will drop to a dollar from Jan.1 2013. "The scale of the technology and infrastructure that must be
built is unprecedented."
Zuckerberg's 1.11 billion Facebook shares are worth about $33 billion, based on a per-share value of $29.76 that the company assigned to its restricted stock units on Dec. 31.
Facebook had previously been expected to raise $10 billion in what would have been the fourth-largest IPO in U.S. history, after Visa Inc, General Motors, and AT&T Wireless, according to Thomson Reuters data. The $5 billion figure in Wednesday's prospectus was an initial figure and could change based on investor demand.
The prospectus underscored how 85 percent of Facebook's 2011 revenue was derived from advertising. Last year, social-gaming company Zynga, creator of Farmville, accounted for 12 percent of Facebook's revenue.
The company Zuckerberg started in his Harvard dorm room in 2004 that grew into a global phenomenon dwarfs any recent Internet debut, such as Zynga, LinkedIn Corp, Groupon Inc and Pandora Media Inc. Their IPOs had mixed
receptions.
The last dotcom player to debut, Zynga, closed 5 percent below its IPO price during its first trading day in December. Google raised just shy of $2 billion in 2004, while the more recent Groupon scared up $700 million and Zynga managed $1 billion.
Facebook's growing popularity among consumers and advertisers has pressured entrenched Internet companies such as Yahoo and Google. In 2011, Facebook overtook Yahoo to become the top provider of online display ads in the United
States by revenue, according to industry research firm
eMarketer.
"Zuckerberg is trying to send a bona fides message to
techies and users," said Max Wolff, chief economic and senior
analyst at GreenCrest Capital. "Very smart and under the
radar."
