Facebook shoots for $5 billion in mega-IPO

SAN FRANCISCO Wed Feb 1, 2012 6:40pm EST

Employees walk past the company logo at the new headquarters of Facebook in Menlo Park, California January 11, 2012. REUTERS/Robert Galbraith

Employees walk past the company logo at the new headquarters of Facebook in Menlo Park, California January 11, 2012.

Credit: Reuters/Robert Galbraith

SAN FRANCISCO (Reuters) - Facebook filed on Wednesday to raise a targeted $5 billion in a hotly anticipated initial public offering, setting the stage for Silicon Valley's biggest-ever IPO.

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, said in its preliminary filing that its net income rose 65 percent to $1 billion in 2011, off revenue of $3.71 billion.

The long-awaited submission 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, which said it now has 845 million active users, 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 January1 2013.

"The scale of the technology and infrastructure that must be built is unprecedented."

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.

As expected, the prospectus underscored how the lion's share of Facebook's revenue, 85 percent, was derived from advertising in 2011. Last year, social-gaming company Zynga, the creator of Farmville, accounted for 12 percent of Facebook's revenue.

(Reporting by Alistair Barr, Poornima Gupta, Gerry Shih and Sarah McBride, Writing by Edwin Chan)

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Comments (7)
jrg wrote:
From a personal finance perspective, it is wise to consider what the business reason is for Facebook to issue an IPO.

Feb 01, 2012 8:15am EST  --  Report as abuse
swips88 wrote:
Heard an interesting idea today:

OWS movement should organize a boycott of facebook (cancel your account and move to another social media) immediately after IPO. This will do more to hurt Wall Street than anything OWS has done to date!

Why? because WS (if past IPO’s are any indication) will be hoarding this stock for their own profit as price of the stock rises in the days / weeks after intial offering. Only negative; Morgan Stanley will still get their 7%? commision on IPO issuance. That’s $350 Billion with a B!

Feb 01, 2012 10:37am EST  --  Report as abuse
brotherkenny4 wrote:
This is now what America makes, social media?

Feb 01, 2012 12:08pm EST  --  Report as abuse
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