FACEBOOK TO GO PUBLIC

No that’s not an oxymoron but a potential move that is worth billions. Everyone’s favourite social networking site (note the sarcasm please) is apparently all set to go public, that is, make an Initial Public Offering (IPO). Floating itself on the stock exchange, the possible move may ring to the tune of almost $100 billion (£63 million) potentially making it the biggest consumer technology public offering in history.

Rumours of Facebook going public have been kicking around for a while, but according to recent news, the move may just be sooner than expected with some sources saying it could happened by the first quarter of next year or even this December. While Facebook founder, Mark Zuckerberg has been notably mum on the subject, LinkedIn founder, Reid Hoffman, who has a considerable stake in Facebook, said that the move is a go.

“I suspect that Mark (Zuckerberg) will choose to go public because the company has to put in a lot of financial work in order to make the necessary filings and so he might as well make sure he benefits employees and ultimately the company from the level of work that’s already involved,” Hoffman said in an interview, adding,

“Going public would benefit Facebook in lots of ways - namely having public currency to do acquisitions. So Mark (Zuckerberg) might as well get the benefit as well as the cost. Given that logic - I would suspect that some time in first half of next year, he will engage in the IPO process.”

But in an interview last month, Zukcerber did opine that if his company did go public it would be in order to reward staff with “equity and options,” because this would help Facebook retain its talent. N. Venkatraman, a business professor at Boston University explains that this move is to retain its talent, “Especially those engineers who received restricted stock that could only be sold after the IPO. Facebook's vision of creating a social layer across online and offline is bold and big, but that vision requires talented engineers who can rapidly create powerful functionality to interconnect the various activities of 1 billion-plus members”

At present, being a private company, Facebook is limited to just 500 stakeholders by law but is under pressure from the US Securities and Exchange Commission (SEC) to reveal the stakeholders it has on the secondary market. The SEC has given the company an April, 2012 deadline and it is expected that around that time, Facebook will make its initial offering. Speculation has been rife as to the valuation of Facebook but since the Goldman Sachs valuation last year, it is expected that Facebook would be bracketed somewhere around $80-100 billion, even though this past year has been quite a financial dud.