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The world's most used website goes public

From a sleepless Harvard University dorm room Mark Zuckerberg sewed the seeds of an empire.

That empire would grow into the world's most used website -- claiming over 845 million unique users a month.  That empire is Facebook.

Today Facebook announced what many had long awaited -- an initial public stock offering.  To be fair, Facebook is just testing the waters.  It's looking to sell around $5B USD of its private shares, from a pool valued at between $85-100B USD.  The long rumored IPO is finally official.

The modest start wouldn't even pull in as much as Facebook FarmVille gamemaker Zynga Inc. who went public in December to the tune of $7B USD ($10 USD/share).  Experts are hoping for a better IPO, this time around.  Zynga's big haul was still considered a disappointment give that it was much lower than the company's original target of $14B USD ($17.20 USD/share).

Facebook will use the ticker symbol FB.

Like many tech moguls, CEO Mark Zuckerberg accepts a low salary -- $500,000 USD per year.  Soon (as of 2013) he will only be paid $1 USD per year.  But the 27-year-old is estimated to have $17.5B USD in Facebook equity.

Facebook launched in 2004.  At the time MySpace was just starting to heat up and people were starting to migrate from "blogs" to "social networks".

Within a couple years Facebook had begun to pick up speed too.  Now the race was on.  But it was a short-lived race.  Facebook's clean layout and college-savvy theme quickly won over users, versus the cluttered mess than was MySpace.

In 2009 Facebook passed a critical milestone, posting its first profit of $229M USD on a revenue of $777M USD.  It has remained profitable ever since, in 2011 earning $1B USD on revenue of $3.7B USD.

Facebook makes much of its money off a combination of data-mining and advertising.  It also makes a growing amount of revenue off of "Facebook Credits" a digital currency for online apps and games.  Facebook gives developers like Zynga 70 percent of the sales proceeds, and it pockets the remaining 30 percent.  Zynga -- by far the biggest Facebook app maker -- chipped in 12 percent of Facebook's total 2011 revenue.

Like many mega-successes of the tech world -- e.g. Apple, Inc. (AAPL) and Microsoft Corp. (MSFT) -- Facebook suffered under accusations that Mr. Zuckerberg "stole" much of its early technology and ideas, as depicted in the fictionalized accounting, "The Social Network".  Facebook also has been forced on the constant defensive over a grow slew of complaints [1][2][3][4] [5][6][7] that it does not respect users' privacy or contributes to societal ills.

However, these concerns have done little to slow the site's growth.  There are 6.84b people on Earth, according to recent estimates.  That means that almost one in eight people on the planet today uses Facebook.

Facebook joins a host of other internet IPOs in the last year -- Pandora Media Inc. (P) ($100M USD IPO; $1.8B USD valuation), Groupon Inc. (GRPN) ($700M USD IPO; $12.7B USD valuation), LinkedIn Corp. (LNKD) ($352.8M USD IPO; $4.2B USD valuation), Zillow Inc. (Z) ($6.92M USD IPO; $539M USD valuation), and Angie's List Inc. (ANGI) ($130M USD IPO; $801.7M USD valuation).

Facebook now has its first legitimate competitor in some time -- Google Inc.'s (GOOGnew social network Google+.  Google+ is more respectful of privacy, in some ways.  The Google homepage is the world's second most used website.

Mr. Zuckerberg may bank off of Facebook IPOs, but he has already pledged to donate all of his money by the time he dies, inspired by his tech mentor and close friend, Microsoft founder and ex-CEO Bill Gates.

Source: CNN

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By StevoLincolnite on 2/1/2012 8:04:24 PM , Rating: 2
Soon (as of 2013) he will only be paid $1 USD per year.

Where can I sign up for pay like that?

/end joke

RE: .
By MrBungle123 on 2/2/2012 10:59:50 AM , Rating: 2
Its how the super rich can avoid taxes... Their "income" is low, in this case only a dollar, while they make money off their stock holdings.

Then they can get on TV and complain how they are rich and don't pay enough taxes (another example of this would be Warren Buffet) while they make massive political contributions to Democrats who will push for increases in the income tax which will hurt the upper middle class more than anyone.

RE: .
By theapparition on 2/2/2012 11:22:17 AM , Rating: 3
Yep, the $1 salary is a joke.

The tax paid on dividend income is ridiculously low. Which is why someone who makes 40million only pay an effective 14% tax rate.

Not a directed attack, since all those in power seek the loopholes to make themselves richer.

This is why we need a flat tax with no loopholes. I'm quite well off, worked hard for every penny, but refuse to play any of the games. If everyone paid their fair share of taxes, things would be a lot different.

RE: .
By Motoman on 2/2/2012 2:08:46 PM , Rating: 1
A true flat tax is pretty regressively abusive to low-income people...but yes, we should have a mind-bendingly simple income tax program, maybe with several tiers of %s.

To a person who scrapped for $10,000 in a year, if a flat tax rate is 10%, that $1,000 is a crippling blow to their finances. Whereas to the guy making a million bucks a year, sending a hundred K off to the feds probably makes little to no difference to his way of life.

Without putting any thought or research into it, off the top of my head maybe an appropriate stepped-percentage thing would be like:

Less than $15,000 - 1%
Less than 35,000 - 3%
Less than 65,000 - 6%
Less than 100,000 - 9%
Less than 250,000 - 12%
Less than 500,000 - 16%
One million or more - 20%

RE: .
By theapparition on 2/2/2012 2:39:14 PM , Rating: 2
I have no problem with a progressive flat tax either.

But when 50% of the population pays almost no taxes, and the top 5% of earners pay less rates than the other 45%, something is broken.

Problem is, there's a whole industry devoted to keeping taxes complicated, and those in power who could enact the changes are those who benefit from the system the way it is.

Can't expect lawyers to support laws restricting legal action, and can't expect politicians to enact laws that hurts their election chances.

RE: .
By Dr of crap on 2/2/2012 3:13:08 PM , Rating: 2
Money makes the rules and there is no way money will allow the changes you project.

Politicans will vote what the money they get says, and the money given comes from the rich/powerful.

The masses of those less paid will only get what the money/rich want them to. And if they think more taxes on a group, then look out.

Our govener, fool that he is, even got elected with one of his platforms that he wanted to tax the richest 1% a higher tax. Our lawmakers couldn't get the state budget figured out in time and the govt shutdown. And our fool govener had to back down from his tax the rich stance so that the budget would go through.

Yet another reason to stop the ability to "give" money to politicans for votes!

RE: .
By cruisin3style on 2/5/2012 5:54:11 AM , Rating: 2
Doesn't the top 1% make more than the bottom 50% combined too? definitely seems broken especially when you consider the median income in the US is supposed to be $40k or so, both in the context that the bottom 50 pay so little and the top 1% make more than everyone below that amount

RE: .
By MrBungle123 on 2/2/2012 2:37:17 PM , Rating: 2
Back before the current crop of thieves got into office the government accounted for about 20% of GDP so the combined tax rate on the entire US economy would need to be about 20% to support it with no deficit...(now its more like 40%)


I think we need some sort of mechanism for taxing people that have low salaries that make billions on stocks. Something that would consider capital gains from stocks income in certain situations. So perhaps we could have income from stocks subject to the income tax if the stock holdings are not part of a 401K and are more than 4x your salary... something like that. Then Bill Gates, Warren Buffet, Mark Zuckerburg, and the Google founders would have to pay a tax rate that more resembled everyone else.

RE: .
By xti on 2/2/2012 2:19:14 PM , Rating: 2
dont/hate player/game

RE: .
By MrBungle123 on 2/2/2012 6:49:42 PM , Rating: 2
I don't... really I can't blame them, its the laws that are screwed up.

Not quite yet
By rs2 on 2/1/2012 9:08:01 PM , Rating: 2
Facebook hasn't "gone public" or made had an IPO yet. They have submitted a filing to do so in the future. The filing is subject to approval (which should be granted), and after that there is still a fair bit of time needed to organize the actual IPO.

It will still be a couple months, at least, before Facebook actually goes public for real. Talk of Facebook having already gone public, such as in this article's tagline, is premature.

RE: Not quite yet
By demiller9 on 2/2/2012 11:24:38 AM , Rating: 4
Jason Mick isn't just premature on this, I'm sure he didn't know the difference.

RE: Not quite yet
By geddarkstorm on 2/2/2012 1:07:23 PM , Rating: 2
He isn't premature. Facebook announced this plan yesterday, exactly as this article says, and it doesn't claim it's currently available. Hence why this article says FB is "testing the waters", gauging initial reactions.

Speaking of initial reactions:

RE: Not quite yet
By rs2 on 2/2/2012 7:39:22 PM , Rating: 2
The tagline for the article reads:

The world's most used website goes public

That is absolutely the wrong tense to use there. A "will go" would be more appropriate. Facebook hasn't gone public yet. If they had I'd find their shares listed in a public stock exchange.

The only thing that has happened, in the present tense, is an SEC filing to go public at some point in the future. Not yesterday, not today, at some future point in time. To talk about the public offering as if it has already happened is entirely premature.

He sewed his seeds?
By villageidiotintern on 2/1/2012 11:29:12 PM , Rating: 5
By hand, or did he use a Singer?

RE: He sewed his seeds?
By Denithor on 2/2/2012 7:47:36 AM , Rating: 4
And these are the humans who went to school (presumably) to learn to write...

2012... Facebook IPO
By ATrigo on 2/1/2012 6:39:28 PM , Rating: 4
Yours Truly,

The Maya Civilization.

RE: 2012... Facebook IPO
By Denithor on 2/2/2012 7:41:43 AM , Rating: 2

RE: 2012... Facebook IPO
By kattanna on 2/2/2012 10:07:04 AM , Rating: 2
The Maya Civilization

that silliness always cracks me up. its just the end of one cycle of the mayan long calendar

thats like you holding up a 2011 calendar and proclaiming that since there are no more days after december 31st on your calendar.. that must be the end of all things hahaha

Social Bubble!
By aspartame on 2/2/2012 5:04:03 AM , Rating: 3
10 years ago we had Tech bubble and now we have social bubble. Facebook has been popular because they kept the ads low. Did somebody calculate how much ads they should display in order to create 100 billion dollars revenue per year? When it goes puplic, investors will pressure it for return of investment. Technically it is a crappy website. It is easy to replicate. As soon they flood the site with ads, users will switch to other sites.

RE: Social Bubble!
By arazok on 2/2/2012 10:27:36 AM , Rating: 2
I said the same thing about Google when it had it's IPO.

The lesson I learned from that mistake is that once established, market share can only be eroded by a better product. And these guys have the money to make sure that doesn't happen.

And I think you underestimate the options available for facebook to generate revenue. They've been taking it slow and easy, because they can. If somebody ever threatens them, they will become more creative. Google+ might be the competition they need to take things to the next level.

RE: Social Bubble!
By tastyratz on 2/2/2012 12:40:40 PM , Rating: 2
what? with things like timeline?
Change does not always mean better, and while a better product can come out to compete, they can also devalue their own product with a really terrible idea. Once the cascade of migrating users starts, it can be a continuous effect. Likely? no... but possible.

27yo billionaire.
By wordsworm on 2/1/2012 8:02:56 PM , Rating: 2
How old was Bill Gates when he hit that value?

RE: 27yo billionaire.
By tayb on 2/1/2012 9:21:27 PM , Rating: 4
Bill Gates was a billionaire at 31 but that was almost 25 years ago. $1 billion in 1987 is almost $2 billion in 2012 dollars.

By NellyFromMA on 2/2/2012 9:24:26 AM , Rating: 2
Like many tech moguls, CEO Mark Zuckerberg accepts a COMPARATIVELY low salary -- $500,000 USD per year.

By n0b0dykn0ws on 2/2/12, Rating: 0
"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings

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