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Details On Facebook IPO Emerge

 May 07, 2012 02:40 PM

(By Mike Swanson) Though Facebook's IPO date has not been made official, analysts and journalists have been saying that the social media giant is aiming for an IPO sometime in May. However, recent events, such as Facebook's billion-dollar Instagram acquisition or its $550 million patent deal with Microsoft, might have pushed the IPO to June instead, as the company now needs to make more financial disclosures.

Its public offering, which could provide Facebook with an equity value between $75 billion and $100 billion, is expected to generate up to $10 billion for the eight-year old company. According to people familiar with the process, Facebook is planning to keep close control over the pricing and allocation of its shares. Moreover, the company seems to be doing some pre-IPO screening, rejecting those it deems as unsuitable shareholders. Facebook appears to favor long-term institutional investors over those looking to make a quick profit. It has also hired 31 banks (instead of the usual 10 or more) to help sell its stock and attract the kind of investors it wants.

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In an amended S-1 filing last week, Facebook reported profits of $205 million, down from $233 million a year ago. Its revenue rose 44% to $1.06 billion. Marketing costs rose from $68 million to $159 million, while R&D increased from $57 million to $153 million. The social network also reported an increase in its daily active and monthly users, of which the latter rose to 901 million worldwide (up from 845 million at the end of 2011). In addition, while users from the US and Canada still account for a majority of Facebook's revenues, it appears that the company will increasingly depend on foreign countries such as Germany, Brazil and Australia for its revenue in the future.

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Investors are now eagerly waiting for more information about the upcoming IPO, though with limited success. As a reflection of the company's tight control over the entire IPO process, Facebook is writing its own registration filing with very little input from the banks. As reported by CNBC last week, Facebook's IPO timing would now depend on the SEC's review of the former's $1 billion acquisition of Instagram. Once that is cleared, the timing of the IPO might become clearer.



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