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9.06pm: Facebook's listing promises to be the float of the century.
Well, other than Google back in 2004. Facebook has announced it plans to go public, filing its intentions with the US Securities and Exchange Commission.
We'll gut the document and follow initital reaction here to a process that will be keenly scrutinised by anybody with the slightest interest in the future of the internet.
Can Facebook meet the inflated expectations?
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Can it prosper as a public company when every quarter's progress will be monitored? And will the notoriously stage shy Mark Zuckerberg become more comfortable with the even higher public profile?
The loose talk pre-announcement is that Facebook will be valued at anywhere between $75bn and $100bn.
Revenues in 2011 have been estimated at just short of $4bn, with further growth expected in 2012. Gawker last December, said that it had a leak of Facebook's financials for the first nine months of 2011, which showed that the company was sitting on a cash pile of $3.5bn. Revenues for the period were $2.5bn, with operating profit of $1.2bn and net income of $714m. Let's see if any of those figures are correct.
We are also expecting a clear fix as to who owns the shares – pre-flotation.
Here's the best breakdown circulating before the float.
Facebook's IPO announcement – as it happened
We'll see if that's accurate too.
Mark Zuckerberg 24% (founder and CEO)
Digital Sky Technologies 10% (Russian VC)
Accel Partners 8% (Silicon Valley VC)
Dustin Moskowitz 6% (actual co-founder)
Eduardo Saverin 5% (sort of co-founder)
Sean Parker 4% (Justin Timberlake in the film)
Goldman Sachs clients 3%
9.52pm: Facebook has filed with the Securities and Exchange Commission to raise $5bn in an initial public offering of stock in the US.
On Comment is Free, Michael Wolff considers how the phenomenally successful enterprise now faces hard business facts.
I don't think that Facebook, with its messianic ambitions and squirrelly zeal, is actually ready for the harsh light of public company life.
Even though it comes to market with the weight and hegemonic feel of the biggest brands, it has grown up in such a bubble of cultishness and doctrine, that primetime scrutiny could shortly become very uncomfortable.
This is the $100bn-and-climbing vision, which now, in the public glare, will have to walk past cagey regulators, grumpy media, issue-hungry politicians, impatient shareholders and irritated customers.
It's a speculative dream and breathtaking power grab, which, in the end, I don't think they'll get away with.
Granted, so far they have.
9.57pm: Facebook's revenue in 2011 was $3.1bn, with net profit of $1bn.
10.03pm: Facebook revenues a bit lower than the widely rumoured $3.8bn, but the net profit at $1bn is higher than the numbers leaked.
10.04pm: Pre-tax income shows just how high Facebook's profit margin already is.
Pre-tax for 2011 is $1.695bn, a margin of 45.6% of sales
10.05pm: Facebook revenues over the last five years. Impressive growth by any measure.
2008 - $153m
2009 - $272m
2010 - $777m
2010 - $1,974m
2011 - $3,711m
10.08pm: Net income for the past five years - you can see the rapid movement into profit.
2007 - $ -138m
2008 - $ -56m
2009 - $ 229m
2010 - $ 606m
2011 - $ 1,000m
10.09pm: Facebook has $3.9bn of cash on its balance sheet.
Handy amount of money to make since it was set up from a Harvard dorm in 2004.
10.11pm: Compared to 2010, Revenue in 2011 increased $1,737 million, or 88% compared to 2010.
The increase was due primarily to a 69% increase in advertising revenue to $3,154 million - advertising the major component of Facebook revenue.
10.12pm: Very interesting: 12% of all Facebook revenue in 2011 came from Farmville games company Zynga.
No wonder FB is so hot on media partnerships.
10.13pm: Facebook, 2011 quarterly revenue growth. No shortage of momentum.
Q1 2011 - $731m
Q2 2011 - $895m
Q3 2011 - $954m
Q4 2011 - $1,131m
10.16pm: Here's the full text of Facebook's statement of intent – it's described as a letter from Mark Zuckerberg.
Here's some of the highlights of his letter:
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.
Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.
People sharing more — even if just with their close friends or families — creates a more open culture and leads to a better understanding of the lives and perspectives of others.
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We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives.
By helping people form these connections, we hope to rewire the way people spread and consume information.
We think the world's information infrastructure should resemble the social graph — a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.
We have already helped more than 800 million people map out more than 100 billion connections so far, and our goal is to help this rewiring accelerate.
Zuckerberg goes on to set out how Facebook hopes "to improve how people connect to businesses and the economy."
We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.
As people share more, they have access to more opinions from the people they trust about the products and services they use.
This makes it easier to discover the best products and improve the quality and efficiency of their lives.
One result of making it easier to find better products is that businesses will be rewarded for building better products — ones that are personalized and designed around people.
We have found that products that are "social by design" tend to be more engaging than their traditional counterparts, and we look forward to seeing more of the world's products move in this direction.
In addition to building better products, a more open world will also encourage businesses to engage with their customers directly and authentically.
More than four million businesses have Pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well.
He also sets out how Facebook hopes "to change how people relate to their governments and social institutions."
By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible.
These voices will increase in number and volume. They cannot be ignored.
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Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few.
Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.
And here's a link to Zuckerberg's crappy signature.
10.20pm: You just got all of Zuckerberg's IPO letter, but what stands out on first reading is his emphasis on the "The Hacker Way" as his company philosophy.
He says that "hacking just means building something quickly or testing the boundaries of what can be done". He describes hackers as "idealistic" and says this approach is how Facebook can develop so fast.
The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it's impossible or are content with the status quo.
Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once.
To support this, we have built a testing framework that at any given time can try out thousands of versions of Facebook. We have the words "Done is better than perfect" painted on our walls to remind ourselves to always keep shipping.
10.23pm: Facebook has 845 million active users as of December 31, 2011, an increase of 39% as compared to 608 million as of December 31, 2010.
10.24pm: Here's a nod to British culture.
"Examples of popular Pages on Facebook include Lady Gaga, Disney, and Manchester United, each of which has more than 20 million Likes."
10.25pm: Mark Zuckerberg salary is $500,000 (check that Stephen Hester).
His bonus for the first half of 2011 was $220,500. But of course his shareholding is huge.
10.26pm: This just in from Josh Halliday, who has been reading the Facebook filing.
Beyond the headline numbers, two figures really stood out for me. Where does Facebook generate revenue?
Last year 85% of its $3.7bn revenue from advertising. More interestingly, 12% of the social network's turnover came through Zynga, the maker of hugely popular games such as Farmville, Cityville and Mafia Wars.
The social game maker Zynga, itself moving towards an IPO, began to make its first moves away from Facebook towards the end of last year.
10.27pm: Mark Zuck also received perks worth $692,679 for costs related to personal use of aircraft chartered in connection and $90,850 for costs related to estate and financial planning during 2011.
So his total pay and perks were $1,487,362 in 2011.
10.34pm: It's the kind of structure that was used by media companies, such as Rupert Murdoch's News Corp, to entrench the control of founders.
It is also used by old British media companies, such as the company that owns the Daily Mail. The theory was that it was becoming unfashionable, but Facebook (and Google) has brought it back.
10.36pm: Here's an alternative link to the SEC data: http://www.scribd.com/doc/80165730/Facebook-IPO-Registration-Statement-on-Form-S-1
10.36pm: Reuters has been crunching the numbers alongside us. Check out their analysis here.
10.38pm: Eduardo Saverin – the press-shy founder of Facebook, famously ousted from the company in its early days, has posted about the IPO on Facebook: "Here it is, what a ride!
Site first launched February 4, 2004."
10.38pm: OK. Share ownership time.
Mark Zuckerberg owns 28.2% of the pre IPO share capital.
If you had invested $1,000 in Microsoft at its IPO, here's how much money you'd have now
Slightly more than we thought.
10.42pm: Other share owners who hold more than 5% of the supervoting Class B shares are listed as follows.
Accel Partners, US venture capital - 11.4%
DST Global, Russian venture capital - 5.5%
Dustin Moskovitz - 7.6%
10.46pm: You will no doubt be asking - how much is Facebook worth then. We don't know yet.
The company hasn't yet put a price on its shares, because that only happens after a negotiation between the Wall Street banks floating the business and prospective buyers. The document that has been released today is the basis of that negotiation.
So - $75bn to $100bn is all we have to go on still. Which makes Mark Zuckerberg's 28% stake worth...well you can do it...potentially $28bn.
Here's the Guardian's story on the filing of the IPO.
10.48pm: More from Josh Halliday:
'It may surprise some that China is mentioned more often than Twitter in Facebook's S-1.
Zuckerberg makes a couple of fleeting references to the microblogging site as a competitor, but Facebook has not ruled out a controversial expansion into China. "We continue to evaluate entering China," the Facebook S-1 says. It adds later: "There are more than two billion global Internet users[…] and we aim to connect all of them"
10.49pm: Banks leading the float are Goldman Sachs, Morgan Stanley and JP Morgan.
Their fee is typically 7% of the amount of money raised, seeing as you asked. Assisting them are Banc of America - Merrill Lynch, Barclays Capital [hurrah for Britain], and Allen and Company
10.54pm: Bloomberg looks at who are set to be the biggest winners from the IPO.
It repeats the point, Mark Zuckerberg could be worth $28.4bn.
Bloomberg also makes a comparison with Google:
Assuming the California-based company is valued at the top end of the range, Zuckerberg will own stock worth $28.4 billion. By comparison, Google Inc. co-founders Sergey Brin and Larry Page are each worth more than $15 billion based on their ownership of that company's shares.Larry Ellison owns stock worth about $31 billion in Oracle Corp., the software company he founded in 1977.
10.55pm: Facebook is only selling the class A shares that have one vote per share in the flotation.
The company has so little need for cash that Facebook will not generate any money in the flotation.Jeff Jarvis Photograph: Lisa Carpenter for the Guardian
10.57pm: US technology and media commentator Jeff Jarvis has written a piece on Zuckerberg's masterplan for the 'sharing economy'.
Here's an extract from his piece:
Mark Zuckerberg believes he is not changing human nature but enabling it.
If you buy that—and I do—then I'd suggest buying his stock, for he has created the platform for the sharing economy.
Zuckerberg sees Facebook as an evolutionary step beyond Google and other net services.
Week in Geek: Everything we know about Microsoft’s layoffs and Redfin’s IPO announcement
"They crawl the web," he told me in an interview for my book, Public Parts. "But there's nothing you can crawl to get information about people. It's all in our minds. So in order to have that service, you need to build the tools that let people share."
The two giants of the net are at war now over what I call signal generation: the ability to get us to generate data about ourselves—who we are, where we are, what we like, whom we like, what we buy, what we want, what we know, what we want to know—so they can serve us more relevant and valuable content, services, and advertising.
Facebook's IPO filing says it is bringing in $3.7 billion in annual revenue, most from advertising.
Last year, Google brought in ten times that. But Facebook has 845 million members, more than half of whom use it daily—an engagement number every newspaper and media organization should shoot for and would die for.
11.00pm: Mark Zuckerberg will be selling some of his shares, but only so he can satisfy taxes that he will incur upon the exercise of an outstanding stock option to purchase 120m shares of the supervoting Class B common stock.
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That means - although this conclusion is tentative - that Zuckerberg won't be netting any cash directly from the float. But then he won't need to. That day will come soon enough - and Wall Street doesn't like to see a selling founder at this point in the company life cycle.
11.02pm: Viewers of The Social Network will wonder where Eduardo Saverin is.
Saverin was Zuckerberg's best friend at Harvard. He is not listed as a shareholder, but Facebook is only listing people and institutions with more than 5%.
So he holds less than that, but we don't know how much less.
11.11pm: This is David Batty, I'm taking over the live blog for the rest of the evening. You can follow me on Twitter @David_Batty.
My colleague Charles Arthur has been examining the details of the IPO on his Twitter account:
Zuckerberg will have majority vote of stock - A shares 1 vote, B shares 10 votes.
He gets lots of B shares.
138m Class B stock with employees issued since 2005 at $0.83.
That's going to be some millionaires there when those flip.
FB revenue growth 2007-2011: 153m, 272m, 777m, 1974m, 3711m.
FB net income 2007-2011: -138m, -56m, 229m, 606m, 1000m (all in $). 2009 was the magic year.
11.19pm: Facebook's claim to be in the same "peer group" as Google is examined by the Wall Street Journal's Deal Journal blog:
Facebook lists Google as a "significant competitor" in its S1 filing and as a member of its "peer group." But looking at the numbers, Google is still a giant compared to the infant Facebook, bringing in more than 10 times the revenue.
But the internet search giant better look out, because Facebook's growing more than twice as fast.
11.25pm: Tech analyst Benedict Evans has been looking at what Facebook's IPO says about its business model on his Twitter account:
At the end of December, 50% of Facebook's users were mobile and 38% were using smartphone apps.
Very clear from FB's filing that the lack of ads on their mobile products is hitting revenue, both indirectly andw through substitution.
He then notes: "We may have potential future monetization opportunities such as the inclusion of sponsored stories in users' mobile News Feeds."
Of 845m monthly users, 360m used FB 6 out of 7 days in December.
SO, FB is regular and 'essential' for about 30% of the base.
11.40pm: Blogger Philip Bump says he is "perplexed" by Facebook's decision to go public, and questions whether the move is down to worries about their reliance on advertising revenue.
Here's what Facebook articulates as the toplines for its strategy for growth - the reasons, in other words, for people to invest:
• Expand Our Global User Community.
• Build Great Social Products to Increase Engagement.
• Provide Users with the Most Compelling Experience.
• Build Engaging Mobile Experiences.
• Enable Developers to Build Great Social Products Using the Facebook Platform.
• Improve Ad Products for Advertisers and Users.
The first one is first for a reason.
International growth, as I mentioned above, is key. ... But the others? Most appear to be about refinement.
I have a lot of confidence in Facebook's ability to innovate in the social space.
... It's not clear to me, though, that this infrastructure syncs nicely with a revenue model predicated mostly on advertising.
Isn't the traditional value in going public to generate capital for planned expansion?
If so - why does Facebook need this infusion of money? ... Over 40% of the company's profit can be accounted for by a partnership with the game manufacturer Zynga. That's a very tenuous position to be in.
Where was the microsoft ipo announcement
Their reliance on advertising exceeds traditional media outlets handily.
I'd ask then - is this IPO a necessary hedge, rather than a golden opportunity?
12.17am: This article from Dan Randall of Reuters explores the options for investors who want a stake in Facebook on the first day of trading.
Investors won't get the full benefit unless they are among the few privileged clients of underwriters, Morgan Stanley the lead among them, who can buy at the offer price.
Still, investors who want a stake in the dominant social media company will have options.
It is easier to buy funds that own stakes in Facebook than to hope an order for individual shares will be filled early on the IPO day.
12.22am: The Associated Press notes how the IPO filing casts a spotlight on some of Facebook's inner workings for the first time.
Interestingly, it also raises questions as to where the company sees its growth coming from.
The documents show, as expected, that Facebook is thriving.
The company earned $668 million on revenue of $3.7 billion last year, according to the filing. Both figures nearly doubled from 2010.
"The company is a lot more profitable than we thought," said Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital.
Although she considered Facebook's numbers "very impressive," she said Facebook needs to talk more about where it sees its growth coming from.
"What new areas of business is it expecting to pursue beyond display ads?"
12.38am:Wired questions whether Facebook's IPO will perform as well as Google's or be a disappointment like Groupon's.
This could mean Facebook's IPO will meet a fate similar to that of this year's other high-profile tech IPOs.
Both Zynga and Groupon actually sank below their IPO share price — right out of the gate — a sign of failure on Wall Street. "The tech class of 2011 has underperformed," said Paul Kedrosky, a prominent financial blogger and senior fellow at the Kauffman Foundation, in an interview. "Because of secondary markets, that post-IPO balance happened pre-IPO.
My expectation is, Facebook will see a very similar phenomenon."
Facebook will have to reveal its privacy investigations now it is going public, Wired also notes:
When it comes to information privacy concerns, Facebook already has a bullseye on its back. That won't change now that Facebook is going public in its highly anticipated Initial Public Offering (IPO). But disclosure rules affecting publicly traded companies may force Facebook to reveal privacy-related investigations that it otherwise might have kept secret.
Facebook won't face any new regulations or government oversight specifically related to privacy, according to the experts who spoke to Ars.
But in the cases of inquiries from the Federal Trade Commission or attorneys general, investigations that might otherwise remain private would become public because Facebook will be forced to disclose events that could have a material impact on earnings.
12.50am: Reuters' social media editor Anthony De Rosa has noticed another interesting fact in the IPO filing:
IPO filing states that "Facebook has been or is currently restricted in whole or in part in China, Iran, North Korea, and Syria".
12.52am: We're wrapping up this live blog now but we'll have more coverage, reaction and analysis to Facebook's IPO tomorrow.
In the meantime, here's a recap of the main points:
• Facebook has filed with the Securities and Exchange Commission to raise $5bn in an initial public offering of stock in the US.
• Its revenue in 2011 was $3.1bn, with net profit of $1bn.
• Last year 85% of its $3.7bn revenue from advertising.
12% came through Zynga, the maker of hugely popular games such as Farmville and Mafia Wars.
• Facebook has $3.9bn of cash on its balance sheet.
• Mark Zuckerberg salary is $500,000. His bonus for the first half of 2011 was $220,500.
• But if Facebook is valued at $100bn as anticipated, Zuckerberg will own stock worth $28.4bn
Thanks for reading and for your comments below.