In the Facebook IPO filing with the SEC today, the company disclosed every detail about how it creates revenue
The social networking giant that coaxes 845 million people to divulge the most intimate details about their lives is one step closer to cashing in on its meteoric rise in what could be the largest initial public offering to come out of Silicon Valley.
Facebook Inc. filed papers Wednesday with the goal of raising $5 billion in a public stock sale that could come in May. The offering would be the largest among Internet companies, eclipsing Google Inc. in 2004 and Netscape Communications in 1995. Depending on demand, the company could be valued between $75 billion and $100 billion.
But in opening itself up for the first time, the famously secretive company also revealed the tough road ahead as it looks to continue its breakneck growth streak while fighting off competitors. In its own words, Facebook said it has to allay concerns of privacy watchdogs and government regulators around the globe while maintaining the loyalty of users as new user growth slows.
The regulatory filing with the U.S. Securities and Exchange Commission also unveiled the collective wealth that could be bestowed on the founder and many of his employees. The IPO could be a bonanza for Mark Zuckerberg, the 27-year-old founder, who owns 28.2% of the company and is its single largest shareholder. His stake could be worth as much as $28 billion, earning him the ninth spot on Forbes' list of richest Americans and putting him in the same league as Microsoft Corp.'s Bill Gates and Oracle Corp.'s Larry Ellison.
The SEC filing provided a telling glimpse into Facebook's finances and operations eight years after Zuckerberg hatched the social network in his Harvard dorm room.
Revenue in 2011 surged 88% to $3.71 billion. About 85% of that revenue came from advertising. Net income rose by nearly two-thirds to $1 billion.
Facebook filed for a $5 billion initial public offering (IPO) Feb. 1, claiming to make $3.7 billion in annual revenue, $1.8 billion in operating income and $1 billion in net income.
With some 845 million users, Facebook may not have been an Internet darling for a few years. When the social network goes public, it will get a seat at the adult's table, joining Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) as an arbiter of online services.
Facebook is the equivalent of the $199 flat-panel LCD at Wal-Mart," Yoshikami said.
Facebook has everything that its famous predecessors Netscape and Google had: legions of loyal users, high-caliber engineers and executives, top-flight technology, loads of promise — and something more: vastly more information than any other company has ever possessed about its users that advertisers can tap.
That's the currency that Facebook is trading in, and investors are banking there is plenty of money to be made from that rich hoard of information as long as Facebook can make inroads on Madison Avenue and sidestep the privacy concerns of users and regulators.
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