Facebook Files For A $5B IPO

NEW YORK (AP) -- Facebook is friending Wall Street: The Internet social network is going public in a stock offering that could value it at up to $100 billion, eight years after its computer-hacking CEO Mark Zuckerberg started the service at Harvard.

The much-anticipated status update means anyone with some cash will be able to own part of a Silicon Valley icon that quickly transformed from dorm-room startup to cultural touchstone.

If its initial public offering of stock makes enough friends among investors, Facebook will probably make its stock market debut in three or four months as one of the world's most valuable companies. Facebook, which is based in Menlo Park, Calif., hopes to list its stock under the ticker symbol, "FB," on the New York Stock Exchange or Nasdaq Stock Market.

In its regulatory filing Wednesday with the Securities and Exchange Commission, Facebook Inc. indicated it hopes to raise $5 billion by selling a small percentage of its shares to the public in its IPO. That would be the most for an Internet IPO, easily surpassing the $1.9 billion raised by Google Inc. in 2004. The final amount will likely change as Facebook's bankers gauge the investor demand.

Joining corporate America's elite would give Facebook financial clout as it tries to make its service even more pervasive and expand its global audience of 845 million users. It also could help Facebook fend off an intensifying challenge from Google, which is looking to solidify its status as the Internet's most powerful company with a rival social network called Plus.

The intrigue surrounding Facebook's IPO has increased in recent months and not just because the company has become a common conduit for everyone from doting grandmas to sassy teenagers to share information about their lives.

Zuckerberg, 27, has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. In Zuckerberg's case, a lawsuit alleging that he stole the idea for Facebook from some Harvard classmates became the grist for a book and a movie that won three Academy Awards last year.

Following the model of Google co-founders Larry Page and Sergey Brin, Zuckerberg set up two classes of stock that will ensure he retains control as the sometimes-conflicting demands of Wall Street exert new pressures on the company. He will have the final say on how nearly 57% of Facebook's stock votes, according to the filing.

Even before the IPO was filed, Zuckerberg was shaping up as his generation's Bill Gates — a geek who parlayed his love of computers into fame and fortune. Forbes magazine estimated Zuckerberg's wealth at $17.5 billion in its most recent survey of the richest people in the U.S. A more precise measurement of Zuckerberg's fortune will be available once the IPO is priced and provides a concrete benchmark for determining the value of his nearly 534 million Facebook shares

The IPO will also mint hundreds of Facebook employee as millionaires because they have accumulated stock at lower prices than what the shares are liked to be valued at on the open market. Facebook employed 3,200 people at the end of 2011.

Depending on how long regulators take to review Facebook's IPO documents, the company could be making its stock market debut around the time that Zuckerberg celebrates his 28th birthday in May.

When most companies go public, they let Wall Street investment banks handle everything. That means the stock being sold is reserved for big institutional investors, shutting out the average investor. Despite speculation that Facebook would try something different, it appears the IPO will be a traditional one.

The IPO filing casts a spotlight on some of Facebook's inner workings for the first time. Among other things, the documents reveal the amount of Facebook's revenue, its major shareholders, its growth opportunities and its concerns about its biggest competitive threats.

The documents show, as expected, that Facebook is thriving. The company earned $668 million on revenue of $3.7 billion last year, according to the filing. Both figures nearly doubled from 2010.

"The company is a lot more profitable than we thought," said Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital.

Although she considered Facebook's numbers "very impressive," she said Facebook needs to talk more about where it sees its growth coming from.

"What new areas of business is it expecting to pursue beyond display ads?"

What's not in the documents, yet, is Facebook's market value. That figure could hit $100 billion, based on Facebook's private valuations and the expectation that it will continue to grow at a rapid pace. Facebook also did not say what percentage of its shares it plans to sell.

Facebook heads a class of Internet startups that have been going public during the past year to some disappointing results. Among them: Daily deals company Groupon Inc., Internet radio service Pandora Media Inc. and Zynga Inc., which has built a profitable business by creating games people can play on Facebook.