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    18 May 2012| last updated at 05:41PM

    Facebook sets richest tech IPO in motion



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    NEW YORK: Facebook on Friday makes the richest-ever share offering for a technology firm, raking in billions of dollars it could wield to dethrone Google as king of the Internet.

     

    Facebook stock priced at $38 per share was to begin trading under the  symbol “FB” on the Nasdaq, giving the world’s leading social network a dizzying  value of $104 billion at its initial public offering (IPO).
     
    Investors were keen to own a piece of Facebook, which grew from a Harvard  dormitory project in 2004 to an online community with more than 900 million  denizens.
     
    Facebook reportedly planned to go public hacker style with an all-night  software bending bash to culminate with co-founder Mark Zuckerberg remotely  ringing the Nasdaq opening bell.
     
    Employees joined in a “hackathon” at Facebook’s offices in the Silicon  Valley city of Menlo Park and were to continue until the IPO at which 421  million shares of common stock were to be sold..
     
    Facebook itself is selling 180 million and holders of previous shares are  selling 241 million.
     
    Facebook was on course to raise $16 billion, making it the richest IPO  after financial giant Visa in 2008, according to Renaissance Capital. The  addition of a possible stock “over-allotment” could boost the total to some  $18.4 billion.
     
    With a market worth of $104 billion, Facebook would be among the most  valuable US companies, ahead of sector giants like Amazon ($98 billion) and  Cisco ($89 billion), and more than twice the value of Ford Motor Co. ($38  billion). But it remains behind Google ($203 billion) and Apple ($495 billion).
     
    Under the share plan, Zuckerberg will hold 55.8 percent of the voting  power, and some 18.4 percent of the value of Facebook. The 28-year-old controls  the firm through a dual class stock structure.
     
    Wall Street and investors around the globe have been girding for a Facebook  IPO frenzy.
     
    In the past few days, Facebook boosted the estimated price for the shares,  and added to the number of shares being offered from insiders.
     
    London bookmakers anticipated a stampede. At the betting firm Spreadex,  clients have been speculating that shares could rise above $56 after their  first day.
     
    Wedbush Securities analyst Michael Pachter said he believed that despite  the large number of shares being offered, Facebook stock price will climb  quickly in trading.
     
    “I would guess it trades a lot higher, and settles in the mid-40s  (dollars),” Pachter told AFP.
     
    Spreadex noted that among other tech IPOs, LinkedIn rose 109 percent the  first day while Groupon surged 31 percent. Social game maker Zynga lost ground  on its first day.
     
    But Spreadex spokesman Andy MacKenzie said that “we have had some customers  holding back based on their belief that Facebook shares may well fall in value  after the furor over the initial launch has died down.”
     
    Lou Kerner, founder of The Social Internet Fund, said he expects a strong  response.
     
    “US institutional demand has been good, the retail and global demand has  been overwhelming,” he said.
     
    London-based Hargreaves Lansdown Stockbrokers said Facebook may have a hard  time living up to lofty expectations but pointed out that it is “a relatively  developed company which can display ’real’ income and profit.”
     
    “There are extremely high expectations for the company’s prospects and  perhaps on that basis it deserves the punchy valuation it has been given,” the  brokerage said in a note to clients.
     
    But the brokers said Facebook faces challenges including how to make money  from the growing base of mobile users.
     
    The IPO’s net proceeds to the company were estimated at $6.4 billion. The  rest of the cash goes to Facebook insiders and others who made early  investments in the social network, and to cover the IPO costs.
     
    The Wall Street Journal said 57 percent of shares will be from insiders,  which is an unusually high percentage. Under Wall Street rules, investors have  to wait six months to sell any shares not offered at the IPO.
     
    Some analysts predicted Facebook’s stock price will jump quickly to $44 a  share but the long-term outlook is less clear.
     
    At the heart of the debate about the wisdom of owning a piece of Facebook  is how much revenue it takes in.
     
    Revenue vaulted to $1.06 billion in the quarter which ended March 31 — an  improvement year-over-year, but down about six percent from the previous  quarter.
     
    According to Experian Hitwise, Facebook.com received nine percent of all US  Internet visits in April 2012. It had 1.6 billion visits a week and averaged  more than 229 million US visits a day for the year-to-date.
     
    Facebook co-founder Eduardo Saverin, who this week revealed he had given up  his dual US citizenship and that he intended to stay on in Singapore, denying  the move was aimed at sparing himself a big tax bill when the site lists on the  stock market, congratulated his former colleagues in a Facebook post on Friday.
     
    He hailed Zuckerberg for “keeping tremendous steadfast focus, however hard  that was, on making the world a more open and connected place.” -- AFP

    The Facebook logo appears on a display inside the NASDAQ Marketsite as people are reflected in the window in New York's Times Square Thursday, May 17, 2012. Facebook priced its IPO at $38 per share on Thursday, at the high end of its expected range. If extra shares reserved to cover additional demand are sold as part of the transaction, Facebook Inc. and its early investors stand to reap as much as $18.4 billion from the IPO. AP/ CX Matiash

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