Wednesday, May 16, 2012

Face Book items of interest..... Note DST , GS , Tiger Global Managementand Peter Thiel wisely cashing out as much as fifty percent of their respective stakes - they key is consider how these early investors have sharply increased their cash in plans !

The social network said yesterday it was offering an extra 85m shares to the public market at the eleventh hour.
Facebook, founded by 28-year-old Mark Zuckerberg in his Harvard dormitory room, boosted the number of shares available by a quarter, from 337.4m to 422m, making Facebook’s market debut the third biggest the US has ever seen. Only the launches of Visa and General Motors were larger.
DST Global, the investment fund of Russian investor Yuri Milner, is now selling 40pc of its stake, up from 23pc originally. Goldman Sachs, which co-invested with DST, and Tiger Global Management will both sell as much as 50pc of their stakes, up from 23pc and 7pc respectively, theWall Street Journal reported.
Peter Thiel, who invested $500,000 (£314,500) in Facebook in 2004, now plans to offer as much as 50pc of his stake, up from 20pc earlier. He stands to make as much as $847m in the flotation.

While the increase in the number of shares being made available for the IPO helps to meet investor demand, it may also indicate sellers do not expect the shares to make signficant gains after the float, so are cashing in now.The increase in the number of shares offered in the IPO came after the social network raised the target price range for its shares to between $34 and $38, putting it on course to raise up to $16bn of investment.
If it achieves the top end of that range, as seems likely given the level of investor demand, Facebook will be worth $104bn, immediately catapulting it past companies such as Disney and Ford in valuation terms.
Mr Zuckerberg, who owns 28.4pc of the company, will become one of the richest people in the world with a personal fortune of nearly $30bn.
Facebook’s value is expected to surge even higher when trading in its shares on the Nasdaq stock exchange begins tomorrow, under the FB ticker.
When Google listed in 2004, it placed at $85 a share and rose as high as $104.06 on its first day of trading before closing up at $100.33.
LinkedIn’s IPO a year ago saw an even bigger jump. Shares in the social network, which is targeted at professionals, were placed at $45 but ended their first day on the stock exchange up at $94.25.
The level of investor interest in Facebook suggests it could follow a similar trajectory. Before the social network released its extra shares, its IPO was so oversubscribed that major institutional investors were forced to scrabble around syndicate desks chasing extra stock with which to bump up their stakes. Some of Facebook’s underwriters were reportedly closing their books early because they had no shares left to sell.
The frenzy of demand does not appear to be much dented by persistent concerns over the longevity of Facebook’s business model, and the effecitveness of its advertising.
Nearly two thirds of Americans who actively invest in the stock market think Facebook is overvalued, and Warren Buffett, the billionaire investor, has said he will not be buying into the company.
General Motors fuelled those anxieties on Tuesday, as it announced that it would no longer pay for advertising on Facebook because the adverts have little impact on consumers’ decisions to buy cars.
Meanwhile Facebook has itself warned that the surge in people using the social network ontheir mobiles is threatening its long-term prospects, because it has not worked out how to monetise that usage fast enough.
Investors and shareholder groups are also concerned about Facebook’s corporate governance, and a dual-class shareholding structure which will effectively allow Mr Zuckerberg to continue running the business as if it were a private company.

Facebook cofounder Eduardo Saverin has renounced his US citizenship.
Doing so, he will probably save at least $67 million in taxes.
…but he's also liable to be "excluded" from physically re-entering the United States.
 US immigration law does not look kindly on former citizens who renounce their citizenship to avoid US taxes. Specifically, it doesn’t look like Saverin should ever be able again to get a visa to enter the United States.
Sec. 212. [8 U.S.C. 1182] details general classes of alients ineligible to gain entrance into the United States. And the law specifically references people in Saverin’s category …
"Former citizens who renounced citizenship to avoid taxation.-Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable"

and just file this away for a short spell.....

On the eve of the Facebook IPO, the country's third-biggest advertiser, GMannounced that it was pulling its entire $10 million ad campaign from Facebook because the ads don't work.
This was obviously bad news for a company that many people still think will one day be bigger than Google.
GM's competitor, Ford, quickly suggested that GM was the problem, not Facebook, by saying that its own Facebook ads work perfectly well.
But other huge companies also appear to be having serious doubts about the value of the Facebook platform.
One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget – a shocking fact given the site’s dominance among users.

Elliott attributes this disappointment to Facebook's lack of innovation on the marketing side as opposed to the user side.
As Facebook CEO Mark Zuckerberg has made crystal clear, he cares about the company's social mission more than the company's business. This means that the company's paying clients will always play second fiddle. And, according to GM and the marketers that Forrester is talking to, this also appears to mean that interest in Facebook as an advertising platform may begin to wane.
Elliott also makes another disturbing point: That Facebook's big new ad product rollout of a couple of months ago hasn't made much of an impact:
But as good as Facebook has been at evolving to serve consumers, that’s how bad it’s been at serving marketers. In the past five years Facebook has lurched from one advertising model to another. Remember when the site charged marketers to host branded pages? Or when every page featured banners from MSN’s ad network? (You may choose forget Facebook Beacon; Mark Zuckerberg would certainly prefer you did.)
Somehow Facebook still hasn’t stumbled upon a model that’s proven consistently successful for marketers, or that brings in the massive revenues to match the site’s massive user base. (The company made less than $4 in ad revenue per active user in 2011.) And its latest ‘big marketing announcement’ in February turned out to be mostly a tiny evolution of its existing ad model. At the same time, Facebook often stands directly in the way of marketers’ efforts to measure the performance of their programs.
Meanwhile, BI's advertising editor Jim Edwards has laid out a "nightmare scenario" in which other big advertisers begin to yank their budgets from Facebook, choosing instead to use the company's free tools to interact with their customers. (This is what GM is doing).
All in, quite discouraging for a company that will go public with a valuation of more than $100 billion.