Original Story: USAToday.com
BEIJING — China's richest man celebrated his 50th birthday last week in the United States and expects his company will last twice as long, plus two years.
Revealing his ambition — and a love of numbers common in China — Jack Ma says Alibaba will last 102 years so the Internet empire he founded in 1999 can span three centuries.
Under Ma's maverick leadership, the 15-year-old firm has already bridged a period of extraordinary change in global trade and the Chinese economy. In a nation with little e-commerce but plenty of Communist Party bureaucrats, he raised a still-growing giant whose U.S. initial public offering, which will start trading under the BABA ticker Friday, is the largest in history.
REJECTED BY KFC
His rags-to-riches journey is just as spectacular. A scrawny Ma, just over 5 feet tall, was rejected by KFC and other employers in his hometown of Hangzhou in east China. He believed in the Internet's business potential when few other Chinese did. Outlandish ideas earned him the nickname "Crazy Jack Ma." No one thinks he's mad now, even when dressing in wild wigs and lipstick for his annual meeting where he serenades a stadium full of Alibaba employees.
Ma's readiness to make fun of himself, and speak his mind, stands in contrast to China's often conservative corporate barons. Charismatic and energetic, this former teacher has become an inspiration to millions across China. He flunked at math but loved English, and countless books and DVDs sell his business lessons in every airport lounge.
Ma — whose net worth is $21.9 billion,according to the Bloomberg Billionaires Index — now stars in the coming-out party for China's private sector onto the world stage. He praises and uses Western management techniques but also quotes regularly from Chairman Mao Zedong. He is a fan of China's kung fu novels and made those legends part of his company's culture. He travels the world with a tai chi trainer.
Jack Ma, whose Chinese name is Ma Yun, was born in 1964 into a markedly different China. Communist Party campaigns dominated daily life. His parents performed a type of musical storytelling that was banned during Mao's devastating Cultural Revolution, from 1966 to 1976.
Ma's grandfather, a local official under the Nationalist Party that Mao defeated, was persecuted as an enemy of the Communist revolution. Ma and his relatives all suffered at that time, wrote Chinese author Zhang Yongsheng in a 2009 biography.
Like most Chinese parents back then, Ma's father beat him growing up. But there were childhood pleasures, too. He liked collecting and fighting crickets, an ancient pastime that Mao also banned. Ma developed an expert ear, able to distinguish the type and size of cricket just by the sound, his friend and personal assistant at Alibaba, Chen Wei, wrote in his 2013 book on Ma.
Starting at age 12, Ma says he awoke at 5 a.m. to walk or bicycle to Hangzhou's main hotel so he could practice his English with foreign tourists, who started trickling into the country after Mao's death in 1976. He did this for nine years and acted as a free tour guide to many, befriended several and later visited one family in Australia.
Those experiences opened his eyes. "I realized what they told me was quite different from what I had learned in school or heard from my parents," Ma told Xiao-Ping Chen, a professor at the University of Washington in Seattle, in an interview published last year.
MA MEETS THE INTERNET
After twice failing the national college entrance exams, Ma entered what he called "Hangzhou's worst college." Graduating in 1988, Ma married his college sweetheart and taught English at a local college for five years, earning $15 a month. During that time, he also applied for, and failed to land, jobs at a local KFC, a hotel and the city police.
Determined to enter business, Ma set up a translation company, but he still had to peddle goods on the street to get by. He traveled to the United States in 1995 as a translator to help a Chinese firm recover a payment. The attempt failed, and the American who owed money pulled a gun on him, Ma says. But a friend in Seattle showed Ma the Internet, and an idea began brewing.
Ma noticed there was not a single online listing for "China" and "beer," unlike those that popped up for American and German beer. He returned to China and set up a listing site that he later sold to the government. After working in Beijing for an Internet firm under the Ministry of Commerce, Ma returned home to Hangzhou to pursue his dream.
ALIBABA FOUNDED
With the help of more than a dozen friends who pooled their resources — just $60,000 — he founded Alibaba, a business-to-business online platform. The company now makes more profit than rivals Amazon.com and e-Bay combined, as China's burgeoning middle class are big spenders online, and small companies rely on Alibaba and its online payment system.
Ma seized opportunities as China was transforming into a market economy. At the time, the Internet was first being promoted, and small, private businesses struggled to get loans and had to compete against government-protected state firms, said economist Feng Pengcheng, director of the China Research Center for Capital Management at the University of International Business and Economics in Beijing.
"The business model Ma Yun created in China suited the Chinese market. It might be a failure in the U.S. market, but it's so successful in China," Feng said. "What's more, Ma Yun is good at cooperating with other talents. His company culture and his personal charm attracted employees, and his slogans are uplifting," he said.
For a billionaire so outspoken on company and business issues, Ma says little about his family and manages to keep his private life quiet and scandal-free. Ma and his wife Zhang Ying have a son, an undergrad at the University of California-Berkeley, where Ma had audited classes. A black-and-white photo of a young Ma with his older brother and younger sister went viral this month in China's cyberspace, as many people were unaware their richest citizen even had siblings.
"Ma Yun's lifestyle is very simple and modest. His hobbies are still tai chi and kung fu novels," Chen, his friend and assistant, said last week from Boston, while accompanying Ma on Alibaba's U.S. roadshow before the IPO.
"I don't think he has changed much, he is still that old style. After the IPO, I am sure his lifestyle will be simpler. He won't change," Chen said. In his book, being published in English this month, Chen said Ma enjoys meditation in the mountains, playing poker with friends and writing his own kung fu fiction. By Ma's own account, he believes in both Buddhism and Taoism, and follows many tenets of Confucianism.
'OPPOSITE OF STUFFY'
"My father said if you were born 30 years ago, you'd probably be in a prison, because the ideas you have are so dangerous," Ma told Charlie Rose in a 2011 TV interview. Despite such bravado for a Western audience, Ma has always been careful in China to avoid statements and actions that could jeopardize his business.
If China ever did permit open elections, Ma could become a popular candidate for top office, said Duncan Clark, a Brit who is a Beijing-based technology consultant. "He is the opposite of stuffy and canned. He's funny, creative and a compelling speaker. I often thought he has another career in stand-up comedy," he said.
Ma resigned last year as Alibaba's CEO, but he clearly remains in charge as the firm's executive chairman. He has hinted at exploring more "cultural" pursuits, such as film-making, education and environmental protection.
"One issue facing China is that people's wallets are bulging, but their heads are empty," he told Hong Kong's South China Morning Post last year. Ma also promises more philanthropy, including what may be China's largest charity foundation. Expect to hear plenty more from maverick Ma.
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Showing posts with label IPO. Show all posts
Showing posts with label IPO. Show all posts
Friday, September 19, 2014
Friday, February 08, 2013
LinkedIn Earnings - Soaring Higher than Forecasted
Story first appeared on USA Today -
Online professional-networking service LinkedIn's fourth-quarter performance added another line to its sterling resume as a public company.
LinkedIn's fourth quarter earnings came in far above Street expectations, boosting the stock in after-hours trading.
The results announced Thursday extended LinkedIn's uninterrupted streak of exceeding analysts' projections for both earnings and revenue. It marked the seventh consecutive quarter since LinkedIn's May 2011 IPO that the company has pulled that off, to the delight of investors.
The run of pleasant surprises is one of the reasons that LinkedIn's stock has tripled from its initial public offering price of $45. The shares surged $12.11, or nearly 10%, to $136.20 in extended trading after the numbers came out.
Wall Street's embrace of LinkedIn contrasts with the cold response given to other Internet services that have gone public during the past few years. Most of them are trading below their IPO prices. The most notable is Facebook, whose stock is worth about 25% less than it was when it made its market debut in May.
Although both run websites devoted to connecting people with common interests, LinkedIn and Facebook are targeting different audiences. Facebook focuses mostly on letting friends and family share good times and swap stories, while LinkedIn concentrates on helping people advance their careers and helping companies fill jobs.
Facebook, which is based in Menlo Park, is the larger of the two services, with more than 1 billion active users and $5.1 billion in revenue last year. LinkedIn, which is based in Mountain View, California, has 20 million account holders and revenue of $972 million in 2012.
But LinkedIn is growing more quickly, partly because it's less dependent on advertising than Facebook and most Internet services. In the fourth quarter, advertising accounted for 27% of its revenue. The remainder comes from various tools that it sells to help recruit workers and glean more insights from the information that its users post on its website.
LinkedIn earned $11.5 million, or 10 cents per share, during the final three months of last year. That marked a 66% increase from $6.9 million, or 6 cents per share, a year earlier.
If not for the costs of employee stock compensation and certain other charges, LinkedIn said it would have earned 35 cents per share. That was far above the average estimates of 19 cents per share among analysts surveyed by FactSet. Analysts excluded certain items from their calculations.
Revenue soared 81% from the previous year to $304 million — about $24 million above analyst forecasts.
LinkedIn's revenue outlook for the current quarter and all of 2013 were roughly in line with analyst estimates, setting the stage for the company to clear those financial bars once again.
Online professional-networking service LinkedIn's fourth-quarter performance added another line to its sterling resume as a public company.
LinkedIn's fourth quarter earnings came in far above Street expectations, boosting the stock in after-hours trading.
The results announced Thursday extended LinkedIn's uninterrupted streak of exceeding analysts' projections for both earnings and revenue. It marked the seventh consecutive quarter since LinkedIn's May 2011 IPO that the company has pulled that off, to the delight of investors.
The run of pleasant surprises is one of the reasons that LinkedIn's stock has tripled from its initial public offering price of $45. The shares surged $12.11, or nearly 10%, to $136.20 in extended trading after the numbers came out.
Wall Street's embrace of LinkedIn contrasts with the cold response given to other Internet services that have gone public during the past few years. Most of them are trading below their IPO prices. The most notable is Facebook, whose stock is worth about 25% less than it was when it made its market debut in May.
Although both run websites devoted to connecting people with common interests, LinkedIn and Facebook are targeting different audiences. Facebook focuses mostly on letting friends and family share good times and swap stories, while LinkedIn concentrates on helping people advance their careers and helping companies fill jobs.
Facebook, which is based in Menlo Park, is the larger of the two services, with more than 1 billion active users and $5.1 billion in revenue last year. LinkedIn, which is based in Mountain View, California, has 20 million account holders and revenue of $972 million in 2012.
But LinkedIn is growing more quickly, partly because it's less dependent on advertising than Facebook and most Internet services. In the fourth quarter, advertising accounted for 27% of its revenue. The remainder comes from various tools that it sells to help recruit workers and glean more insights from the information that its users post on its website.
LinkedIn earned $11.5 million, or 10 cents per share, during the final three months of last year. That marked a 66% increase from $6.9 million, or 6 cents per share, a year earlier.
If not for the costs of employee stock compensation and certain other charges, LinkedIn said it would have earned 35 cents per share. That was far above the average estimates of 19 cents per share among analysts surveyed by FactSet. Analysts excluded certain items from their calculations.
Revenue soared 81% from the previous year to $304 million — about $24 million above analyst forecasts.
LinkedIn's revenue outlook for the current quarter and all of 2013 were roughly in line with analyst estimates, setting the stage for the company to clear those financial bars once again.
Thursday, August 02, 2012
Funds Exit Early from Facebook
Story first reported from WSJ.com
It wasn't supposed to end like this.
Fidelity Investments was an early buyer of Facebook Inc. shares. In the spring of 2011, two dozen of its funds bought more than $200 million worth of the company's private stock. Then, when Facebook went public in May, many of those funds and other Fidelity funds loaded up on publicly traded shares.
Now, many of the giant Boston-based company's fund managers are shrinking their stakes.
Twenty-one Fidelity funds sold more than 1.9 million public Facebook shares combined in June, with 16 of them selling more than a quarter of their stakes in the company, according to investment-research firm Morningstar Inc. Private shares can't be traded until later this year.
It is unclear whether the Fidelity funds made or lost money on the Facebook shares, but the stock has languished below its $38 offering price on May 18. In June, it traded between $25.52 and $33.45; shares hit an all-time low of $20.84 before closing at $20.88 on Wednesday.
The moves represent an about-face for Fidelity, one of the first institutional investors to take a significant stake in Facebook and the country's third-largest mutual-fund company by assets. Fidelity's funds owned the shares for at most six weeks—much shorter than the median holding period of about 22 months for U.S. stock funds, according to Morningstar.
To be sure, the sales represent a very small portion of the funds' holdings. Also, 13 Fidelity funds bought 2.2 million shares of Facebook in June, though more than 1.3 million of those went to index funds, which passively track established stock indexes.
Mutual-fund analysts say it is uncommon for mutual funds to flip shares so quickly.
Nearly two dozen Fidelity funds are dumping Facebook funds at a hurried clip, and they sold nearly two million shares in June alone.
A Fidelity spokeswoman said, "Our managers are not tied to a minimum holding period and need to be able to respond to changes in market conditions."
Facebook Chief Executive Mark Zuckerberg met with Fidelity executives, along with other large asset managers, during Facebook's IPO roadshow in May. Morgan Stanley and other underwriters of Facebook stock also called top institutional clients, including Fidelity, before the IPO to tell them their analysts had lowered Facebook's earnings and revenue estimates.
Fidelity wasn't the only company with funds that flipped Facebook shares. Turner Investment Partners' Large Growth fund, which has a typical holding period of about seven months, sold 28% of its shares within weeks of buying them. OppenheimerFunds Inc.'s Global Allocation fund in June sold more than 10,000 shares, or 10% of its holdings.
A fraction of mutual-fund companies, including Fidelity, report holdings on a monthly basis, while the majority report only quarterly. That means investors in most funds that sold shares in May and June won't ever know how much Facebook stock their funds once owned.
The biggest reported seller of shares in June was the Fidelity Puritan fund, a "balanced fund" that invests in both stocks and bonds. It sold more than 623,000 shares, or a quarter of its overall stake. Other big sellers included Fidelity Disciplined Equity, which invests in both growth and value stocks and sold more than 444,000 shares, or 47% of its stake, and Fidelity Dividend Growth, which sold more than 167,000 shares, or 25% of its stake. Fidelity Magellan, one of the best-known actively managed funds in the country, sold more than 155,000 shares, or 17% of its stake.
Fidelity Puritan has an average holding period of about eight months, according to Morningstar, and Fidelity Dividend Growth has an average holding period of a year and a half.
It is unusual for an IPO like Facebook to be sold so quickly by long-term fundamental investors. Typically, IPOs see growing ownership by such investors and shrinking ownership by trade-oriented hedge funds, according to a study completed last year by Ipreo, a capital-markets data and advisory firm.
In a study of 270 IPOs of U.S. companies between 2009 and 2011, institutions such as mutual funds and pension funds represented 45% of the IPOs' initial allocation. But one quarter later, they represented 67% of the shareholders in those same stocks.
This doesn't mean many mutual-fund managers won't try to cash in on a post-IPO pop, said University of Florida finance professor Jay Ritter, who studies IPOs. Such managers, many of whose companies pay millions in commissions to underwriters, expect to get shares of an IPO and try to flip the shares for a profit once they are widely traded, he said.
It wasn't supposed to end like this.
Fidelity Investments was an early buyer of Facebook Inc. shares. In the spring of 2011, two dozen of its funds bought more than $200 million worth of the company's private stock. Then, when Facebook went public in May, many of those funds and other Fidelity funds loaded up on publicly traded shares.
Now, many of the giant Boston-based company's fund managers are shrinking their stakes.
Twenty-one Fidelity funds sold more than 1.9 million public Facebook shares combined in June, with 16 of them selling more than a quarter of their stakes in the company, according to investment-research firm Morningstar Inc. Private shares can't be traded until later this year.
It is unclear whether the Fidelity funds made or lost money on the Facebook shares, but the stock has languished below its $38 offering price on May 18. In June, it traded between $25.52 and $33.45; shares hit an all-time low of $20.84 before closing at $20.88 on Wednesday.
The moves represent an about-face for Fidelity, one of the first institutional investors to take a significant stake in Facebook and the country's third-largest mutual-fund company by assets. Fidelity's funds owned the shares for at most six weeks—much shorter than the median holding period of about 22 months for U.S. stock funds, according to Morningstar.
To be sure, the sales represent a very small portion of the funds' holdings. Also, 13 Fidelity funds bought 2.2 million shares of Facebook in June, though more than 1.3 million of those went to index funds, which passively track established stock indexes.
Mutual-fund analysts say it is uncommon for mutual funds to flip shares so quickly.
Nearly two dozen Fidelity funds are dumping Facebook funds at a hurried clip, and they sold nearly two million shares in June alone.
A Fidelity spokeswoman said, "Our managers are not tied to a minimum holding period and need to be able to respond to changes in market conditions."
Facebook Chief Executive Mark Zuckerberg met with Fidelity executives, along with other large asset managers, during Facebook's IPO roadshow in May. Morgan Stanley and other underwriters of Facebook stock also called top institutional clients, including Fidelity, before the IPO to tell them their analysts had lowered Facebook's earnings and revenue estimates.
Fidelity wasn't the only company with funds that flipped Facebook shares. Turner Investment Partners' Large Growth fund, which has a typical holding period of about seven months, sold 28% of its shares within weeks of buying them. OppenheimerFunds Inc.'s Global Allocation fund in June sold more than 10,000 shares, or 10% of its holdings.
A fraction of mutual-fund companies, including Fidelity, report holdings on a monthly basis, while the majority report only quarterly. That means investors in most funds that sold shares in May and June won't ever know how much Facebook stock their funds once owned.
The biggest reported seller of shares in June was the Fidelity Puritan fund, a "balanced fund" that invests in both stocks and bonds. It sold more than 623,000 shares, or a quarter of its overall stake. Other big sellers included Fidelity Disciplined Equity, which invests in both growth and value stocks and sold more than 444,000 shares, or 47% of its stake, and Fidelity Dividend Growth, which sold more than 167,000 shares, or 25% of its stake. Fidelity Magellan, one of the best-known actively managed funds in the country, sold more than 155,000 shares, or 17% of its stake.
Fidelity Puritan has an average holding period of about eight months, according to Morningstar, and Fidelity Dividend Growth has an average holding period of a year and a half.
It is unusual for an IPO like Facebook to be sold so quickly by long-term fundamental investors. Typically, IPOs see growing ownership by such investors and shrinking ownership by trade-oriented hedge funds, according to a study completed last year by Ipreo, a capital-markets data and advisory firm.
In a study of 270 IPOs of U.S. companies between 2009 and 2011, institutions such as mutual funds and pension funds represented 45% of the IPOs' initial allocation. But one quarter later, they represented 67% of the shareholders in those same stocks.
This doesn't mean many mutual-fund managers won't try to cash in on a post-IPO pop, said University of Florida finance professor Jay Ritter, who studies IPOs. Such managers, many of whose companies pay millions in commissions to underwriters, expect to get shares of an IPO and try to flip the shares for a profit once they are widely traded, he said.
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Tuesday, May 22, 2012
Birthday, IPO and a Wedding...What Next?
Story first appeared in USA Today.
For Facebook founder and CEO, it was quite a week — from birthday, to IPO, to I DO.
A day after the historic Facebook stock offering, on Saturday he wed his girlfriend of nearly a decade, according to a guest authorized to speak for the couple. The person spoke only on the condition of anonymity.
He gave his new bride a ring he had designed with a "very simple ruby" to end an incredibly eventful week, according to the guest.
The couple married at his Palo Alto, Calif. home in front of fewer than 100 stunned guests who thought they would be attending a party to celebrate her graduation from medical school.
On Monday, the Facebook CEO turned 28 and his new bride graduated from the University of California, San Francisco School of Medicine, where she'd studied pediatrics.
Then on Friday, he took his blue-and-white web behemoth public in one of the most anticipated IPOs in Wall Street history.
The seemingly well-coordinated timing was largely a coincidence, the guest said. The wedding had been planned for months and the couple was waiting for her to finish medical school, but the date of the IPO was a "moving target" not known when the wedding was set.
Attendees, including Facebook's chief operating officer, were told after they arrived that they were not mere party guests but wedding guests.
Ditching his trademark hoodie and sneakers, the Facebook CEO sported a dark blue suit and tie with a white shirt for the ceremony, while the new bride wore a traditional white wedding dress with veil and lace.
Food was served family-style and included dishes from the couple's favorite Palo Alto sushi restaurant.
The two at Harvard, where he founded Facebook in a dorm room in 2004, and have been together for more than nine years.
Even after the IPO, the CEO, who grew up in Dobbs Ferry, N.Y., remains Facebook's single largest shareholder, with 503.6 million shares, and he controls the company with 56 percent of its voting stock.
The site has grown into a worldwide network of almost a billion people and made its founder, Time magazine's Person of the Year in 2010, one of the most famous businessmen of the Internet age.
For Facebook founder and CEO, it was quite a week — from birthday, to IPO, to I DO.
A day after the historic Facebook stock offering, on Saturday he wed his girlfriend of nearly a decade, according to a guest authorized to speak for the couple. The person spoke only on the condition of anonymity.
He gave his new bride a ring he had designed with a "very simple ruby" to end an incredibly eventful week, according to the guest.
The couple married at his Palo Alto, Calif. home in front of fewer than 100 stunned guests who thought they would be attending a party to celebrate her graduation from medical school.
On Monday, the Facebook CEO turned 28 and his new bride graduated from the University of California, San Francisco School of Medicine, where she'd studied pediatrics.
Then on Friday, he took his blue-and-white web behemoth public in one of the most anticipated IPOs in Wall Street history.
The seemingly well-coordinated timing was largely a coincidence, the guest said. The wedding had been planned for months and the couple was waiting for her to finish medical school, but the date of the IPO was a "moving target" not known when the wedding was set.
Attendees, including Facebook's chief operating officer, were told after they arrived that they were not mere party guests but wedding guests.
Ditching his trademark hoodie and sneakers, the Facebook CEO sported a dark blue suit and tie with a white shirt for the ceremony, while the new bride wore a traditional white wedding dress with veil and lace.
Food was served family-style and included dishes from the couple's favorite Palo Alto sushi restaurant.
The two at Harvard, where he founded Facebook in a dorm room in 2004, and have been together for more than nine years.
Even after the IPO, the CEO, who grew up in Dobbs Ferry, N.Y., remains Facebook's single largest shareholder, with 503.6 million shares, and he controls the company with 56 percent of its voting stock.
The site has grown into a worldwide network of almost a billion people and made its founder, Time magazine's Person of the Year in 2010, one of the most famous businessmen of the Internet age.
For more information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Law News,
visit the Nation of Law blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
For more Environmental News,
visit the Environmental Responsibility News blog.
Facebook Stocks Didn't Jump As High As Expected
Story first appeared in USA Today.
Facebook didn't make too many friends Friday.
After jumping 18% in early trading upon its much-hyped initial public offering, its gains quickly evaporated.
By day's end, shares of the world's largest social networking company finished at $38.23, barely above its $38 offering price. (In aftermarkets trading, shares were trending higher).
Facebook raised about $16 billion through the sale, which gave the company a maket value of about $104 billion. But its lackluster public debut deflated the pre-IPO hype that had floated in the business press and on Wall Street for weeks. Many market prognosticators had expected Facebook shares to surge Friday. But after an early pop to $45, it was mostly downhill.
Traders and market observers blame the lackluster performance on heavy trading demand that delayed Nasdaq processing market orders and over-optimism by Facebook's investment bankers, who boosted the IPO's size and share price from a range of $28 to $35 a share. Wall Street's continued slump also hurt. Stocks fell for the 12th time in 13 sessions Friday on fears over the slowing global economy and mounting financial woes in Europe.
Big IPOs and big deals often mark the top of major market moves. This is a very big IPO that was well-followed and well-hyped. When you see big investors exit or start to take profits there is a reason to believe that there is substantial downside ahead. Markets are very, very weak and very vulnerable.
That the stock didn't fall below its $38 IPO price suggests that underwriters who brought the deal to market swooped in to buy shares to prop it up, for fear of a public relations disaster. The investment bankers came in; they had to jump in and buy the stock. They couldn't have such a hyped IPO come down below the offering price.
The drop in price doesn't mean there was a lack of trading. By day's end, nearly 480 million shares traded, a record for a first-day offering.
Before the stock opened, there were so many last-minute orders at the Nasdaq exchange that trading, expected to start at 11 a.m. ET, was delayed 30 minutes. Marketplaces and other broker/dealers experienced severe slowness, and unfortunately, those issues impacted customers.
Given the size and complexity of the offering, the number of investors involved, the early glitch and trading delays were not surprising.
When you have an IPO with this kind of huge spotlight shining on it, you want it to come off clean. It might just be frustration in the short run but doesn't do long-term impact to investor sentiment.
Born in a Harvard University dorm room in 2004, Facebook has become part of the social fabric of more than 900 million worldwide users.
Despite the barely-above-the-IPO close, Facebook enriched scores of employees, including the hoodie-wearing founder and CEO, who sold 30 million shares worth more than $1.1 billion. He will remain Facebook's largest stakeholder.
Before trading started, people huddled outside the windows of the Nasdaq site in New York's Times Square, waiting for the stock to open. Some held up cellphones and cameras pointed at the Nasdaq board, waiting to get a picture of the first price change.
Facebook's rich valuation comes as it tries to cement its role in the Internet. While Facebook had about $1 billion in earnings last year on revenue of $3.7 billion, the company still has to prove it can find ways to boost profits.
Going into the IPO, there has been a lot of skepticism from investors, in particular institutional investors, questioning anything from whether the price of the stock is fair, to whether Facebook can successfully monetize and sell ads. It's nice to have the stock up for one day, but it's only one day. It's hard to extrapolate much as to the future of the company."
In coming days, investors expects plenty of ups and downs for the stock, as investors assess a company whose prospects are hard to pin down because of its evolving business model. You're going to see obviously an extreme amount of volatility over the next week as people evaluate the stock.
Facebook didn't make too many friends Friday.
After jumping 18% in early trading upon its much-hyped initial public offering, its gains quickly evaporated.
By day's end, shares of the world's largest social networking company finished at $38.23, barely above its $38 offering price. (In aftermarkets trading, shares were trending higher).
Facebook raised about $16 billion through the sale, which gave the company a maket value of about $104 billion. But its lackluster public debut deflated the pre-IPO hype that had floated in the business press and on Wall Street for weeks. Many market prognosticators had expected Facebook shares to surge Friday. But after an early pop to $45, it was mostly downhill.
Traders and market observers blame the lackluster performance on heavy trading demand that delayed Nasdaq processing market orders and over-optimism by Facebook's investment bankers, who boosted the IPO's size and share price from a range of $28 to $35 a share. Wall Street's continued slump also hurt. Stocks fell for the 12th time in 13 sessions Friday on fears over the slowing global economy and mounting financial woes in Europe.
Big IPOs and big deals often mark the top of major market moves. This is a very big IPO that was well-followed and well-hyped. When you see big investors exit or start to take profits there is a reason to believe that there is substantial downside ahead. Markets are very, very weak and very vulnerable.
That the stock didn't fall below its $38 IPO price suggests that underwriters who brought the deal to market swooped in to buy shares to prop it up, for fear of a public relations disaster. The investment bankers came in; they had to jump in and buy the stock. They couldn't have such a hyped IPO come down below the offering price.
The drop in price doesn't mean there was a lack of trading. By day's end, nearly 480 million shares traded, a record for a first-day offering.
Before the stock opened, there were so many last-minute orders at the Nasdaq exchange that trading, expected to start at 11 a.m. ET, was delayed 30 minutes. Marketplaces and other broker/dealers experienced severe slowness, and unfortunately, those issues impacted customers.
Given the size and complexity of the offering, the number of investors involved, the early glitch and trading delays were not surprising.
When you have an IPO with this kind of huge spotlight shining on it, you want it to come off clean. It might just be frustration in the short run but doesn't do long-term impact to investor sentiment.
Born in a Harvard University dorm room in 2004, Facebook has become part of the social fabric of more than 900 million worldwide users.
Despite the barely-above-the-IPO close, Facebook enriched scores of employees, including the hoodie-wearing founder and CEO, who sold 30 million shares worth more than $1.1 billion. He will remain Facebook's largest stakeholder.
Before trading started, people huddled outside the windows of the Nasdaq site in New York's Times Square, waiting for the stock to open. Some held up cellphones and cameras pointed at the Nasdaq board, waiting to get a picture of the first price change.
Facebook's rich valuation comes as it tries to cement its role in the Internet. While Facebook had about $1 billion in earnings last year on revenue of $3.7 billion, the company still has to prove it can find ways to boost profits.
Going into the IPO, there has been a lot of skepticism from investors, in particular institutional investors, questioning anything from whether the price of the stock is fair, to whether Facebook can successfully monetize and sell ads. It's nice to have the stock up for one day, but it's only one day. It's hard to extrapolate much as to the future of the company."
In coming days, investors expects plenty of ups and downs for the stock, as investors assess a company whose prospects are hard to pin down because of its evolving business model. You're going to see obviously an extreme amount of volatility over the next week as people evaluate the stock.
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Wednesday, May 16, 2012
Facebook Co-Founder Renounces US Citizenship
One of the the billionaire co-founders of Facebook Inc. renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may allow him to skirt tax obligations and reduce his tax bills.
Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. The co-founder's stake is about 4 percent, according to the website whoownsfacebook.com. At the high end of the proposed IPO market capitalization, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.
He joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped start Facebook in a Harvard University dormitory and stands to reap billions of dollars after the world’s largest social network holds its IPO.
It’s plainly lawful and at the same time profoundly ungrateful to the country that provided these opportunities for him. He benefited from his U.S. education, the contacts he made at Harvard, and most important the extraordinary openness and flexibility of our economy that encourages startup ventures to flourish.
His name is on a list of people who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. He had made the move several months ago in an effort to lower U.S. tax burdens.
‘Practical’ Residence
The co-founder recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time. Saverin still does hold Brazilian citizenship.
Americans who give up their citizenship owe what is effectively an exit tax on the estimated capital gains from their stock holdings at the time of the renunciation, even if they don’t sell the shares. In other words, for tax purposes, the IRS treats the stock as if it has been sold.
In this case, the gain and subsequent tax bill would be based on the estimated fair market value as calculated by his tax advisers, not an actual open market sale. They could value his Facebook stake at far less than its worth once shares trade publicly.
The co-founder and his advisers could say that the value of his stake should be reduced for tax purposes because of the potential difficulty of selling the shares while the company was private.
‘Smart Idea’
Renouncing citizenship well in advance of an IPO is a very smart idea, from a tax standpoint. Once it’s public you can’t fool around with the value.
And even the tax bill triggered by dropping U.S. citizenship can be deferred indefinitely until he actually sells the shares. In that case, he would have to pay interest during the deferral period -- currently at an annual rate of 3.28 percent per year.
Gains from any future appreciation of the stock will be earned free of any capital gains tax both in the U.S. and in Singapore. Singapore does not impose a capital gains tax.
While Saverin helped start Facebook, he hasn’t always had a harmonious relationship with Zuckerberg. He scuffled with his Harvard University classmate over his ownership in Facebook. Saverin sued him and settled for an undisclosed amount.
Brazilian Investment
The 2010 movie “The Social Network” portrayed him as a scorned friend who provided the company’s early financing and then got squeezed out.
He moved to the U.S. in 1992, and became a citizen in 1998. He has invested in Asian, U.S. and European companies.
He plans to invest in Brazilian and in other global companies that have strong interests in entering the Asian markets, Goodman said.
Saverin’s U.S. holdings include Jumio Inc., an online payments company, and ShopSavvy Inc., a price-comparison service.
Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records.
Income-tax rates for top U.S. earners will rise to 39.6 percent from 35 percent next year and rates on capital gains and dividends also are due to rise, unless Congress intervenes.
U.S. Loss
It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice. The tax cost, complexity and the traps for the unwary are among the considerations.
Some of the world’s largest wealth-management firms have ramped up efforts to fight tax evasion ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc, Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. all say they have turned away business.
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. That means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which may depress banks’ returns.
Facebook plans to price its IPO on May 17, 2012 offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are leading the sale.
Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. The co-founder's stake is about 4 percent, according to the website whoownsfacebook.com. At the high end of the proposed IPO market capitalization, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.
He joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped start Facebook in a Harvard University dormitory and stands to reap billions of dollars after the world’s largest social network holds its IPO.
It’s plainly lawful and at the same time profoundly ungrateful to the country that provided these opportunities for him. He benefited from his U.S. education, the contacts he made at Harvard, and most important the extraordinary openness and flexibility of our economy that encourages startup ventures to flourish.
His name is on a list of people who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. He had made the move several months ago in an effort to lower U.S. tax burdens.
‘Practical’ Residence
The co-founder recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time. Saverin still does hold Brazilian citizenship.
Americans who give up their citizenship owe what is effectively an exit tax on the estimated capital gains from their stock holdings at the time of the renunciation, even if they don’t sell the shares. In other words, for tax purposes, the IRS treats the stock as if it has been sold.
In this case, the gain and subsequent tax bill would be based on the estimated fair market value as calculated by his tax advisers, not an actual open market sale. They could value his Facebook stake at far less than its worth once shares trade publicly.
The co-founder and his advisers could say that the value of his stake should be reduced for tax purposes because of the potential difficulty of selling the shares while the company was private.
‘Smart Idea’
Renouncing citizenship well in advance of an IPO is a very smart idea, from a tax standpoint. Once it’s public you can’t fool around with the value.
And even the tax bill triggered by dropping U.S. citizenship can be deferred indefinitely until he actually sells the shares. In that case, he would have to pay interest during the deferral period -- currently at an annual rate of 3.28 percent per year.
Gains from any future appreciation of the stock will be earned free of any capital gains tax both in the U.S. and in Singapore. Singapore does not impose a capital gains tax.
While Saverin helped start Facebook, he hasn’t always had a harmonious relationship with Zuckerberg. He scuffled with his Harvard University classmate over his ownership in Facebook. Saverin sued him and settled for an undisclosed amount.
Brazilian Investment
The 2010 movie “The Social Network” portrayed him as a scorned friend who provided the company’s early financing and then got squeezed out.
He moved to the U.S. in 1992, and became a citizen in 1998. He has invested in Asian, U.S. and European companies.
He plans to invest in Brazilian and in other global companies that have strong interests in entering the Asian markets, Goodman said.
Saverin’s U.S. holdings include Jumio Inc., an online payments company, and ShopSavvy Inc., a price-comparison service.
Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records.
Income-tax rates for top U.S. earners will rise to 39.6 percent from 35 percent next year and rates on capital gains and dividends also are due to rise, unless Congress intervenes.
U.S. Loss
It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice. The tax cost, complexity and the traps for the unwary are among the considerations.
Some of the world’s largest wealth-management firms have ramped up efforts to fight tax evasion ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc, Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. all say they have turned away business.
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. That means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which may depress banks’ returns.
Facebook plans to price its IPO on May 17, 2012 offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are leading the sale.
For more information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Law News,
visit the Nation of Law blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
For more Environmental News,
visit the Environmental Responsibility News blog.
Tuesday, May 15, 2012
Polled Facebook Users Unsure
Story first appeared in USA Today.
Facebook's public offering will be the largest and perhaps most highly anticipated Internet deal in history. But faced with great expectations, Facebook is staring down some unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy.
According to a new AP-CNBC poll, 57% of Facebook users say they never click ads or other sponsored content when they use the site, with another 26% saying they hardly ever engage in such activity.
While the company makes money, in part, simply by displaying sponsored content, user clicks are a critical part of an advertiser's calculus when gauging how effective those ads are and how much they're willing to pay for them. In the first quarter, Facebook generated 82% of its $1.06 billion in revenue from advertising sales. In the company's online IPO pitch to retail investors, the CFO says the company is working to make ads more relevant, more social, and more engaging as it looks to grow.
And while Facebook has been able to decrease its reliance on sponsored content (down from 98% of sales in 2009), the hopes of expanding the company's e-commerce footprint also faces public resistance, the poll shows. A majority of participants (54%) said they wouldn't feel safe using the platform for financial transactions like purchasing goods or services. Only 8% said they would feel extremely or very safe in doing so.
While Facebook currently has a limited market for real goods and services (most financial transactions are done for virtual goods and games), analysts cite e-commerce as an extremely lucrative, and untapped, market for the platform — and one that could be vital for the company's future growth.
The public also remains wary of Facebook's valuation, widely bandied about as $100 billion, with just 3% of respondents saying they thought the company would be undervalued at such a number — half said they thought it would be overvalued (that view rises to 62% among active investors). Views are also split on whether not shares of Facebook stock would make a good investment — with progressively less positive opinions for older age groups.
The youngest respondents (age 35 and under) were most likely to say Facebook would be a good investment (59% said yes), followed by baby-boomers and Generation X-ers (55% and roughly 50% respectively), followed by seniors (only 39%).
As for the Facebook CEO: The wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18% of respondents saying they were extremely or very confident in his ability to run a large publically traded company like Facebook. Yet, pinning down a specific reason was difficult for respondents who neither cited his age, temperament, nor reputation as significantly affecting those abilities.
Facebook users have consistently cast a wary and suspicious eye on the platform: 59% of respondents said that they had little to no trust in Facebook to keep their information private. Yet despite those ongoing concerns, the number of users (and their engagement) continues to increase. Facebook has grown to 901 million monthly active users worldwide, with personal computer users spending 6-7 hours per month on the site (compared to just 3 minutes for Google+ users), according to recent data from ComScore.
But charting a future course may prove more difficult than meets the eye for the company, according to the poll. And navigating that landscape under the daily pressures of a public company could prove even more difficult.
Facebook's public offering will be the largest and perhaps most highly anticipated Internet deal in history. But faced with great expectations, Facebook is staring down some unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy.
According to a new AP-CNBC poll, 57% of Facebook users say they never click ads or other sponsored content when they use the site, with another 26% saying they hardly ever engage in such activity.
While the company makes money, in part, simply by displaying sponsored content, user clicks are a critical part of an advertiser's calculus when gauging how effective those ads are and how much they're willing to pay for them. In the first quarter, Facebook generated 82% of its $1.06 billion in revenue from advertising sales. In the company's online IPO pitch to retail investors, the CFO says the company is working to make ads more relevant, more social, and more engaging as it looks to grow.
And while Facebook has been able to decrease its reliance on sponsored content (down from 98% of sales in 2009), the hopes of expanding the company's e-commerce footprint also faces public resistance, the poll shows. A majority of participants (54%) said they wouldn't feel safe using the platform for financial transactions like purchasing goods or services. Only 8% said they would feel extremely or very safe in doing so.
While Facebook currently has a limited market for real goods and services (most financial transactions are done for virtual goods and games), analysts cite e-commerce as an extremely lucrative, and untapped, market for the platform — and one that could be vital for the company's future growth.
The public also remains wary of Facebook's valuation, widely bandied about as $100 billion, with just 3% of respondents saying they thought the company would be undervalued at such a number — half said they thought it would be overvalued (that view rises to 62% among active investors). Views are also split on whether not shares of Facebook stock would make a good investment — with progressively less positive opinions for older age groups.
The youngest respondents (age 35 and under) were most likely to say Facebook would be a good investment (59% said yes), followed by baby-boomers and Generation X-ers (55% and roughly 50% respectively), followed by seniors (only 39%).
As for the Facebook CEO: The wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18% of respondents saying they were extremely or very confident in his ability to run a large publically traded company like Facebook. Yet, pinning down a specific reason was difficult for respondents who neither cited his age, temperament, nor reputation as significantly affecting those abilities.
Facebook users have consistently cast a wary and suspicious eye on the platform: 59% of respondents said that they had little to no trust in Facebook to keep their information private. Yet despite those ongoing concerns, the number of users (and their engagement) continues to increase. Facebook has grown to 901 million monthly active users worldwide, with personal computer users spending 6-7 hours per month on the site (compared to just 3 minutes for Google+ users), according to recent data from ComScore.
But charting a future course may prove more difficult than meets the eye for the company, according to the poll. And navigating that landscape under the daily pressures of a public company could prove even more difficult.
For more information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Law News,
visit the Nation of Law blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
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