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Archive for the ‘IPO news’ Category

As IPO looms, Facebook also wants to be a mobile leader

Posted in Board Of Intellectual Capital, FaceBook, Investments, IPO news, Java, Social Networks, Strategy, Technology, tagged , on April 9, 2012| Leave a Comment »

Article from GigaOm.

“MENLO PARK, CA – On a wind-swept chunk of land where Sun Microsystems experienced both the highest peaks and the lowest depths that the tech industry has to offer, Facebook is quietly working to define itself as an industry force in more than just social networking.

It has only been a few months since Facebook employees began occupying what used to be known as “Sun Quentin,” a self-contained cluster of office buildings on the shore of San Francisco Bay in the shadow of the Dumbarton Bridge, but the company is already starting to think of itself as an industry leader that can shift the debate within the computing revolution of our time: the transition to mobile. It invited reporters last week from several tech-oriented news organizations — Techcrunch, VentureBeat, PandoDaily, and yours truly, among others — down to its new headquarters to discuss the plans Facebook unveiled at Mobile World Congress in February to help advance HTML5 as a mobile development standard.

James Pearce, Facebook’s head of mobile developer relations, thinks that Facebook has the heft and developer relationships to be a unifying force around HTML5 through the Mobile W3C Community Group, introduced two months ago. The linchpin of the so-called “mobile Web,” HTML5 is a collection of technology specifications that has been endlessly debated by the five major Web browser companies — Apple, Google, Microsoft, Mozilla, and Opera — yet implemented piecemeal before the final standard has been agreed upon, leading to all kinds of developer confusion.

“It’s possible that browser vendors don’t know the demand” for mobile Web applications, said Pearce. “This group is kind of like a product-management process in a way.”

The Web is the way

Facebook wants to accelerate the development of a set of common standards and test suites that app developers can use to ensure their apps meet minimum requirements. It also wants to nudge HTML5 standards-makers into deciding on technology for the most crucial features.

HTML5 is extremely promising as a platform that will allow mobile developers to stop worrying about Apple’s App Store approval process and Android’s fragmentation issues, but building a mobile app entirely in HTML5 is a non-starter for many developers because they need to access things like a smartphone’s camera or graphics hardware: areas that HTML5 standards have yet to address.

Still, even Facebook–perhaps as broad an indicator of Internet activity as there is outside of Google search–sees more activity through the mobile Web than it does through iOS and Android combined, Pearce said. He thinks developers just need someone with a little clout to show them the ways of the mobile Web and force browser makers to get their act together on things like camera access.

Facebook’s real intentions are much broader. Apple and Google are notably absent from its group, although Pearce said they were invited to join. Both companies at times have invoked the promise of the mobile Web — Apple in banning Flash from iOS devices, Google in projects such as Chrome OS — but both have significant interests in native application development for iOS and Android.

Facebook, with 850 million users around the world, does not want to be tied down to either platform, especially now that Google is competing directly against it with Google+. Hence the interest in turning HTML5 into a reality: a development platform that no one company truly controls, but that may depend on Facebook’s ecosystem in order to attract users and advertisers en masse. Pearce said HTML5 developers face huge challenges around application discoverability and monetization, areas in which Facebook — with a huge user base and its own payments system — would be all too willing to help.

Widespread rumors have surfaced over the last several years about Facebook’s desire for mobile independence. The company has been said to be working on its own phone, similar to how Amazon used a basic version of Android to build a tablet designed completely around its services. It has also been reportedly interested in building a version of Facebook in HTML5 that is just as functional as native versions of the app for iOS or Android.

Facebook has been quite successful enticing developers to build applications within the desktop version of Facebook, with Zynga’s runaway growth as perhaps the best example of the opportunities it has provided to developers. Now it’s trying to see if it can extend that influence to mobile, a space currently dominated by the big kids on the Silicon Valley block; Apple and Google.

Friends wanted

“The industry was ready for this to happen, and we think of ourselves as good industry citizens,” Pearce said Thursday. He is, of course, referring to “the industry” in terms of the legions of mobile developers, as compared to the established smartphone players. Those developers might be frustrated by the experience provided by Apple and Google, but they have no other alternative to reach mobile users, given the lack of sophistication around the HTML5 standard and the degree to which we’ve all become obsessed with mobile apps since the App Store made its debut in 2008.

In order for its vision to happen, however, Facebook will have to lure a new collection of mobile-oriented companies — several of whom have been in business longer than CEO Mark Zuckerberg has been legally able to drive–into its orbit, away from Apple and Google. Prominent carriers such as AT&T and Verizon are on board as well as handset makers like Samsung and Nokia, but collaborative industry groups come and go in the technology world without ever having done much to change the conversation.

As the company’s already-legendary IPO approaches, Facebook is increasingly interested in defining its mobile strategy on its own terms, courting the tech media (“We’re trying something new,” read the invitation) in order to present its own vision for the future of mobile computing.

Facebook employees are all too aware of the fate that befell Sun, a pioneering company eventually done in by its inability to change along with a changing industry. With its social-media domination seemingly well in hand, Facebook is looking ahead to its next challenge: ensuring it can remain a destination for consumers and developers without having to toe Apple or Google’s line.”

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What Demandware IPO says about Wall Street & tech IPOs

Posted in Board Of Intellectual Capital, boic, Business models, Economy, internet, Investments, IPO news, Market research, Strategy, Technology, tagged , , , , , , , , on March 15, 2012| Leave a Comment »

Article from GigaOm.

“Demandware who? Yeah, that is exactly what I thought. However, a tweet from financial and venture industry observer Dan Primack alerted me to the initial public offering of this Burlington, Mass.-based e-commerce platform provider that sells its services to folks like Barneys, Crocs and Tory Burch. The IPO has priced at $16 a share which values the company at $448 million. The company is raising $88 million.”

The company lost money on mere a $56 million in 2011 revenue, a sign that Wall Street is ready to punt on even marginal technology IPOs — so expect more of those to follow in coming months. Jim Cramer on CNBC’s Mad Money show said that one should not confuse a “trade with an investment.” In other words, buy at the time of IPO and then flip it. Buying later is a sucker’s bet. About Demandware, Cramer said, that if the stock priced below $15 it is good. “Anything more than that and there might not be enough juice to merit buying,” he said. Oops!”

Read more articles here.

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5 stories to read this weekend

Posted in Board Of Intellectual Capital, Economy, FaceBook, Intellectual capital, internet, IPO news, Market research, tagged , , , , , on February 12, 2012| Leave a Comment »

Article from GigaOm.

Don’t get mad at me for not finding seven stories for you to read this weekend. I have been busy with some other stuff and as a result I have not been able to spend as much time reading as I normally do. Regardless, here is an abbreviated recommendation list. Hope you enjoy them.

Read more here.

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Investors Get the Chance to Assess Facebook’s Potential

Posted in Board Of Intellectual Capital, Business models, Economy, FaceBook, internet, Investments, IPO news, Market research, Social Networks, Strategy, Venture Capital, tagged , , , , , , , , , , , , , , , , , on February 2, 2012| Leave a Comment »

Article from NYTimes.

“With a huge initial public offering on the runway, Facebook has shown that it pays to have friends. New investors will now have to decide what they are willing to pay to be friends.

The giant social network said in a filing on Wednesday that it was seeking to raise up to $5 billion through its I.P.O. Many close to the company say that Facebook is aiming for a debut that would value it between $75 billion and $100 billion.

At the top end of the range, Facebook would be far bigger than many established American companies, including Amazon, Caterpillar, Kraft Foods, Goldman Sachs and Ford Motor. Only 26 companies in the Standard & Poor’s index of 500 stocks have a market value north of $100 billion.

Already, Facebook is a formidable moneymaker. The company, which mainly sells advertising and virtual goods, recorded revenue of $3.71 billion in 2011, an 88 percent increase from the previous year. According to its filing, Facebook posted a profit of $1 billion last year.

“Facebook will have more traffic than anyone else, and they’ll have more data than anyone else,” said Kevin Landis, the portfolio manager of Firsthand Technology Value Fund, which owns shares in the privately held company. “So, unless they are impervious to learning how to monetize that data, they should be the most valuable property on the Internet, eventually.”

A lofty valuation for Facebook would evoke the grandiose ambitions of the previous Internet boom in the late 1990s. Back then, dozens of unproven companies went public at sky-high valuations but later imploded.

Investors are eyeing the current generation of Internet companies with a healthy dose of skepticism. Zynga, the online gaming company, and Groupon, the daily deals site, have both struggled to stay above their I.P.O. prices since going public late last year.

“We’ve seen thousands of investors get burned before,” said Andrew Stoltmann, a securities lawyer in Chicago. “It’s a high risk game.”

The potential payoff is also huge.

Consider Google. After its first day of trading in 2004, the search engine giant had at a market value of $27.6 billion. Since then, the stock has jumped by about 580 percent, making Google worth nearly $190 billion today.

Facebook is still a small fraction of the size of rival Google. But many analysts believe Facebook’s fortunes will rapidly multiply as advertisers direct increasingly more capital to the Web’s social hive.

Mark Zuckerberg, founder and chief executive of Facebook.

Mark Zuckerberg, a founder of Facebook and its chief executive, even sounded like his Google counterparts in the beginning. In the filing, Mr. Zuckerberg trumpeted the company’s mission to “give everyone a voice and to help transform society for the future” — not unlike Google’s plan: “don’t be evil.”

Investors are often willing to pay up for faster growth. At a market value of $100 billion, Facebook would trade at 100 times last year’s earnings. That would make the stock significantly more expensive than Google, which is currently selling at 19.6 times profits.

Newly public companies with strong growth prospects often garner high multiples. At the end of 2004, the year of its I.P.O., Google was trading at 132 times its earnings.

But investors have less expensive options for fast-growing technology companies. Apple made nearly $1 billion a week in its latest quarter, roughly the same amount Facebook earned in all of 2011. At a recent price of $456, Apple is trading for roughly 16.5 times last year’s profits.

Investors now have to try to ignore the I.P.O. hype and soberly sift through the first batch of Facebook’s financial statements to gauge the company’s potential.

Online advertising is a prime indicator. At Facebook, display ads and the like accounted for $3.15 billion of revenue in 2011, roughly 85 percent of the total. With 845 million monthly active users, advertisers now feel that Facebook has to be part of any campaign they do.

“When you have an audience that large, it’s hard not to make a lot of money from it,” said Andrew Frank, an analyst at Gartner, an industry research firm.

For all the promise of Facebook, the company is still trying to figure out how to properly extract and leverage data, while keeping its system intact and not interfering with users’ experiences. On a per-user basis, Facebook makes a small sum, roughly $1 in profit.

The relationship with Zynga will be especially important. The online game company represented 12 percent of Facebook revenue last year, according to the filing. However, estimated daily active users of Zynga games on Facebook fell in the fourth quarter, from the third quarter, the brokerage firm Sterne Agee said in a recent research note — a trend that could weigh on the social networking company.

Facebook also faces intense competition for advertising dollars, something it acknowledges in the “risk factors” section of its I.P.O. filing. While advertisers will likely choose to be on both Facebook and Google, they will inevitably compare results they get from both. Some analysts think Google may have the edge in such a competition.

Google users tend to be looking for something specific. This makes it easier for advertisers to direct their ads at potential customers, analysts say. “Visually, Facebook ads are eye-catching, but in terms of accuracy of targeting, they are not even close to Google’s ads,” said Nate Elliott, an analyst at Forrester Research. “A lot of the companies we talk to are finding it very hard to succeed on Facebook.”

However, the high level of interaction on Facebook could prove valuable to advertisers. “At Facebook, you are looking at people’s interests, and what they are sharing,” said Gerry Graf, chief creative officer at Barton F. Graf 9000, an advertising agency in New York that has used Facebook for clients. If Facebook becomes a place where people recommend, share and buy a large share of their music and movies, such a business could generate large amounts of advertising revenue, as well as any user fees.

“Facebook has become the biggest distribution platform on the Web,” said Daniel Ek, the founder of Spotify, a service that accepts only Facebook users.”

Read original article here.

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Tech Valuations Defy the Restraints of Reality

Posted in Board Of Intellectual Capital, Economy, FaceBook, internet, Investments, IPO news, LinkedIn, Market research, Social Networks, Strategy, Technology, tagged , , , , , , , , , , , , on January 23, 2012| Leave a Comment »

Article from NYTimes.

“On a recent Thursday night I stood motionless and perplexed on the dance floor of a San Francisco club. As I looked around, 300 or so people danced and darted back and forth to a free open bar while laser lights shot overhead. Cellphones glowed, like a video of luminescent jellyfish, as people snapped pictures and slung moments of the evening onto dozens of social networks.

What made the evening so perplexing was that the party I was attending celebrated Path, a mobile social network that just two months earlier was essentially written off in Silicon Valley. If the company held a party back then, people would have assumed it was a going-out-of-business sale. Now, after rebooting to positive reviews from the blogosphere, Path is again the talk of Silicon Valley. Some are even proclaiming that the company could be “the next Facebook.”

Watching the Valley’s perception of Path go from positive to negative and back has been like watching a hyperactive child with a yo-yo. The valuation has oscillated in near synchronicity.

This, I have learned, is the mentality of much of Silicon Valley, where decisions are not always made based on revenue or potential business models, but instead seem to be driven by a herd mentality and a yearning to be a part of a potential next big thing.

This is most evident in the valuations that are given to companies here. Two start-ups, each with 10 million users and no revenue, can be valued anywhere from $50 million to $1 billion.

Facebook is a prime example of this. The company does generate considerable revenue and is currently valued at $84 billion and is expected to reach $100 billion by the time of its initial public offering later this year. That’s a higher market valuation than Disney or Amazon.

Paul Kedrosky, an investor and entrepreneur, explained in an interview that one reason valuations are so wildly inflated is that venture capitalists want to be associated with a potentially successful start-up just so it looks good in their portfolio. This, he said, has driven absurd buying on the secondary private market, where stocks are bought and sold before a company goes public.

“There is massive buying on the secondary market by venture guys just for the showmanship of it,” he said. “These buyers are much less price sensitive and just want a company in their portfolio so they can stick the logo on their Web site.”

A report released last week by SecondMarket.com, such an online marketplace, said it had $558 million in transactions in 2011, up 55 percent from the year earlier. Almost two-thirds of those transactions were for consumer Web sites and social media start-ups.

Other investors give money to several companies hoping to strike it rich with at least one. I call that the Peter Thiel Effect. Mr. Thiel, a co-founder of PayPal, gave $100,000 to Mark Zuckerberg, a founder of Facebook, when the company was starting out. That investment is expected to be worth $1 billion when Facebook goes public.

In other instances, you have spite investing. This is when venture capitalists will give millions of dollars to a start-up simply because they were not given the opportunity to invest in the competitor with the original idea.

Some investors no longer even need to hear about a company to hand out money. Jakob Lodwick, an entrepreneur and co-founder of Vimeo, recently raised $2 million simply on the promise that he might have a good idea for a company in the near future.

It’s as if someone found out where Hasbro prints Monopoly money and gave every venture capitalist a key to the company’s storage facility.

“I have never seen such a generation of people shorting tech stocks,” Mr. Kedrosky said, noting that he too has chosen to bet that Groupon, Zynga and LinkedIn will fall significantly in value. “Usually the short community is more nervous about it, but there is a monolithic view that this generation of technology I.P.O.’s is completely broken.”

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