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Facebook makes long-awaited IPO filing

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February 2, 2012

Will members and investors 'like' Facebook becoming a publicly listed company (Photo: Shut...

Will members and investors 'like' Facebook becoming a publicly listed company (Photo: Shutterstock)

On Wednesday, Facebook filed an S-1 document with the United States Securities and Exchange Commission announcing its intention to sell shares to the public. The eagerly anticipated move by the world's dominant social networking site sees Facebook's books open to potential investors - and the just plain curious - for the first time. Although the IPO will mean the internet giant will answer to shareholders and a board, the stock structure will see Facebook founder Mark Zuckerberg controlling 57 percent of voting shares.

While the IPO filing is big news in financial circles, Facebook's 845 million active monthly users (according to figures in the filing) won't have noticed any difference when logging into the site - yet. But there's no doubt that Facebook will now be under pressure to increase revenues to keep shareholders happy. Figures included in the filing show that while costs ballooned from US$942 million in 2010 to $1.995 billion in 2011, net income rose from $606 million to $1 billion in the same period.

The filing also reveals that Facebook makes relatively little on advertising on mobile devices, which are rapidly becoming a preferred platform for accessing not only Facebook, but the internet as a whole, for many users.

Just how Facebook will use the personal information of its millions of members and leverage its staggering reach to generate profits - and whether it can do so while staying true to Zuckerberg's stated mission of making "the world more open and connected" - will now come under the scrutiny of not only industry pundits, but shareholders.

While Facebook shares are already traded on a closed market, it will be publicly traded from sometime later this northern spring. The offering is expected to raise as much as $10 billion with the company expected to be valued at somewhere around $75 to $100 billion. Not bad for something that started life in Zuckerberg's dorm room less than a decade ago.

About the Author
Darren Quick Darren's love of technology started in primary school with a Nintendo Game & Watch Donkey Kong (still functioning) and a Commodore VIC 20 computer (not still functioning). In high school he upgraded to a 286 PC, and he's been following Moore's law ever since. This love of technology continued through a number of university courses and crappy jobs until 2008, when his interests found a home at Gizmag.   All articles by Darren Quick
3 Comments

Wow, shareholders seem greedy. It's not enough to buy into something already making a profit?

Pushing to increase profits may turn out a bit like strangling the golden goose.

Von Meerman
2nd February, 2012 @ 11:50 pm PST

What about FaceBook users becoming share holders !

Kerebail Ramakrishnachar
3rd February, 2012 @ 04:52 am PST

Facebook is going to make a lot of money with its public offering, but has it ever made a real profit?

Nelson
3rd February, 2012 @ 10:10 am PST
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