Facebook IPO won't be derailed, analysts say
As roadshow gets underway, Facebook execs will face financial and legal questions; but IPO still expected to be tech's biggest yet
As the expected date of Facebook's long-awaited initial public offering nears, analysts and investors are taking a last, close look at the financial, legal and other details that could help or hurt what many observers expect will be the biggest IPO in tech history.
Facebook is expected to launch a coast-to-coast roadshow for financial analysts on Monday as most watchers reportedly agree that the company has settled on a May 18 date for the IPO.
Few question whether the IPO will be a success -- most expect Facebook will finish the day valued at $75 billion or more, though some are keeping a close eye on some potential pitfalls.
"This one is going to keep people on the edge of their seats both because of the relative inexperience of Facebook's CEO and how big this is expected to go," said Rob Enderle, an analyst with the Enderle Group.
"The company isn't quite as well situated as it was," Enderle added. "There are increasing concerns surrounding their future revenues, the Instagram acquisition, which bypassed the board, and increasing litigation risk. There is a lot of drama surrounding this property at the moment -- and that can scare off investors."
The company's pre-IPO roadshow, where top executives pitch the potential value of Facebook stock to potential investors, is expected to include stops in New York, Boston, San Francisco, Chicago, Baltimore and possibly Los Angeles.
And while interest and excitement around the IPO continues to gain momentum, Facebook executives should expect to face some some tough questions.
For instance, two high-profile and high-budget Facebook acquisitions in April have raised eyebrows: The company agreed to pay $1 billion for Instagram and $550 million for patents filed by AOL and owned by Microsoft.
On top of that, last month Facebook released financial data showing that first quarter 2012 profits were 12% lower than the year-earlier period.
On the legal front, Facebook in March was hit with a lawsuit filed by Yahoo that alleged that the social networking firm infringed on 10 Yahoo patents. Since then, Yahoo has added six more patents to the list.
Just yesterday, Facebook filed documents with the SEC reporting that it expects the initial share price to fall between $28 and $35, which would bring a valuation of $60 billion and $75 billion, far lower than the $100 billion initially predicted by industry experts.
"They'd probably like to have a bit stronger financial results backing them up," said Dan Olds, an analyst at The Gabriel Consulting Group. "Weaker than expected advertising revenues probably trimmed a bit off the offering price."
- Facebook launches redesign with a bit of the old, a bit of the new
- Facebook eyes solar-powered drone company
- Facebook coughs up $19B for WhatsApp's younger users
- Facebook buying WhatsApp for $16 billion
- Facebook's birthday present: A look back at your social life
- At 10, Facebook strives not to be your granny's social network
- Facebook sees apps in its future ... lots of apps
- Facebook hijacks Trending feature from rival Twitter
- Facebook to kill off one kind of ad some users hated
- Facebook uses a seasoned Chef to keep servers simmering
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
- Aberdeen Group: Marketing Analytics for Manufacturing: Forging Customer Insights There are no recalls for poor marketing. Manufacturers need to get their customer intelligence and messaging right the first time. Learn how.
- The Brave New World of Customer-Centric Manufacturing The Unique Opportunity for Manufacturers to Better Understand their Consumers
- See the Possibilities Utilizing Data Visualization Do you simply want to collect data, or do you want to derive business insights from it? What if you could quickly and...
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All IT Industry White Papers | Webcasts