Friday, May 4, 2012
Gavin O'Malley, May 4, 2012, 12:17 PM
Analysts Pore Over Facebook IPO Bloomberg

With Facebook’s big day looming, Web watchers are dissecting the company’s IPO plans, its bold financial projections, and the risks that investors will assume.

“Facebook is betting its growth prospects will persuade investors to pay 99 times earnings for its initial public offering, a higher multiple than 99 percent of companies in the Standard & Poor’s 500 Index,” Bloomberg points out.

Indeed, Facebook will seek a market value of as much as $96 billion, offering shares at $28 to $35 each, according to a new regulatory filing.

“It’s really, really expensive,” Bob Rice, managing partner at Tangent Capital Partners LLC, said on Bloomberg Television this week. “It’s very hard for me to get my arms around a valuation of 80, 90 billion dollars for a company that did a couple of hundred million dollars of profit in the quarter.”

Still, “the frenzy surrounding the Facebook public offering is reminiscent of the dot-com boom of the late 1990s, when investors clamored to get a piece of the next hot Internet company,” notes The New York Times’ Dealbook blog.

Meanwhile, included in its regulatory filing, this week, Facebook also noted the future threat of patent lawsuits from Yahoo over hardware in Facebook’s Open Compute Project.

“Facebook has already been fighting Yahoo over patents, and had to spend more than a half-billion dollars to pick up patents from Microsoft in defense,” TechCrunch reminds us. “Facebook notes that it received a letter from Yahoo warning that technology used in Facebook’s Open Compute Project hardware may violate 16 Yahoo patents.

Likely a bigger concern, however, “While [CEO Mark Zuckerberg] has amassed more than 900 million users since starting Facebook in 2004, his challenge is to stem slowing sales growth amid increasing competition from Google and Twitter,” Bloomberg writes.

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  • Gavin O'Malley, May 4, 2012, 1:08 PM
  • When AOL bought the Huffington Post last year for $315 million, it gave founder Arianna Huffington editorial reign over its portfolio properties, including TechCrunch, Patch.com, MovieFone and MapQuest. What’s more, more than 30 AOL properties, including Politics Daily, were aligned up the Huffington Post umbrella. Apparently, though, that didn’t work out, as Huffington told The Wall Street Journal on Thursday that her portfolio at AOL is being reduced back to Huffington Post alone. “The management structure created tensions with staff at some of the properties,” WSJ reports. “Patch management, for instance, differed with Ms. Huffington over strategy for the local news sites, according to people familiar with the matter. TechCrunch founder Michael Arrington quit in a public spat with Ms. Huffington." Don’t feel bad for Huffington, however. Not only did the sale of HuffPo make her a very wealthy lady, but this latest reorganization will allow her to focus on a major international expansion of the Huffington Post, as well as the introduction of a streaming video network. Better yet, as WSJ points out: “The shift gives her more control of the Post going forward.” Read the whole story...
  • Poor Yahoo. Whenever you think it can’t worse for the once-reigning Web portal, it does. The latest issue comes courtesy of CEO Scott Thompson, who has reportedly come up under fire for telling the SEC -- and Yahoo's board -- that he had a computer science degree from Stonehill College. Unfortunately, according to Business Insider, “He does not have one.” Yahoo says it was “an inadvertent mistake.” That, according to BI, “is an outrageous and insufficient response.” Leading the charge against Thompson is Dan Loeb, a Yahoo shareholder and hedge fund manager of Third Point who is also in the middle of a proxy war against the company. In a leter sent to Yahoo’s board on Thursday, Loeb wrote: “If misrepresentations were made, they would confirm yet again that Yahoo is in dire need of a complete corporate governance overhaul. As we have asserted repeatedly and forcefully, as Yahoo’s largest outside shareholder and a voice for our fellow investors, we believe the Yahoo Board requires fresh, outside perspectives from individuals who have no connection to a failed regime and have the expertise to address the serious challenges facing the Company. ” Read the whole story...
  • Things are moving pretty fast for social media management platform HootSuite. Just the other month, it raised $20 million in a second investment round, which valued the company at $200 million. Now, the startup is reportedly in the process of raising $50 million at a $500 million valuation. “And what’s making this even more interesting are the investors that are being mentioned in connection with the round: HootSuite is looking to have discussions with Twitter, Facebook, LinkedIn and Google -- a sign of how the surge in social media investments is also giving a lift to companies that are figuring out ways to harness that for third parties,” TechCrunch writes. According to one TechCrunch source, Facebook, Google, LinkedIn and Twitter already have a “great relationship” with HootSuite, and that the company was looking to build a deal that would give them all “upside in Hootsuite’s success.” Meanwhile, regarding the $500 million valuation, HootSuite CEO Ryan Holmes said: “At today’s run rate this would be a very fair valuation for investors, but we have yet to determine if we will bring in additional partners. That said, we have had quite a few inquiries.” Read the whole story...