Facebook Said to Plan Record IPO at $100 Billion Valuation

Facebook CEO and Founder Mark Zuckerberg
Facebook chief executive officer and Founder Mark Zuckerberg. Photographer: David Paul Morris/Bloomberg

Facebook Inc. is considering raising about $10 billion in an initial public offering that would value the world’s largest social-networking site at more than $100 billion, a person with knowledge of the matter said.

The company may file for the IPO before the end of the year, said the person, who asked not to be identified because the deliberations are private. Exact timing for the filing hasn’t been determined, the person said.

Facebook’s $100 billion valuation would be twice as high as it was in January, when the company announced a $1.5 billion investment from Goldman Sachs Group Inc. and other backers. The IPO is far enough away that the details may change, said Lise Buyer, principal of the Class V Group, an IPO advisory firm.

“It’s far too early to accurately predict where the valuation will be on deal day,” Buyer said.

At $10 billion, the offering would raise more money than any other technology IPO, a sign Facebook expects investors to clamor for a piece of the social-networking company. The amount would dwarf that of the previous record holder, Infineon Technologies AG, which generated $5.23 billion in an offering announced in 1999 and completed in 2000 -- during the dot-com heyday. Agere Systems Inc. raised $4.14 billion in 2000, putting it second.

Time to Grow

Facebook expects to be required by U.S. regulators to disclose financial results by April 30, 2012, if it doesn’t go public by then, the company said in January. Facebook decided to wait until 2012 for its IPO to give Chief Executive Officer Mark Zuckerberg more time to gain users and boost sales, people familiar with the matter said last year.

The company also announced today that it has forged an agreement with the Federal Trade Commission to settle privacy complaints. The move may help allay criticism that it prods users into sharing too much personal information. To help protect privacy, Facebook has introduced more than 20 tools over the past 18 months, Zuckerberg said today in a blog posting.

Facebook, which boasts more than 800 million users, is increasing its focus on mobile technology as well, aiming to take advantage of the shift to smartphones and tablets. The company expects its next 1 billion users to come mainly from mobile devices, rather than desktop computers.

Jonathan Thaw, a spokesman for Palo Alto, California-based Facebook, declined to comment on the IPO plans.

Google’s IPO

Google Inc., one of Facebook’s chief rivals in the Internet advertising market, raised $1.67 billion in its IPO in 2004. It is now valued at $188.7 billion.

Facebook’s revenue will more than double to $4.27 billion this year from $2 billion in 2010, research firm EMarketer Inc. said in September.

At $100 billion, Facebook would be worth 23 times that projected revenue, signaling the company expects its faster growth rate to justify a premium valuation over rivals. Mountain View, California-based Google trades at 6.4 times projected current-year revenue. Apple Inc. is worth 2.5 times sales, while the multiple for Microsoft Corp. is 2.8.

The valuation Facebook is said to be seeking would place it near PepsiCo Inc., which is worth $99.5 billion, and Verizon Communications Inc., at $103.7 billion. Apple is the world’s most valuable technology company, at $346.9 billion.

Facebook’s valuation is currently pegged at $66.6 billion by SharesPost Inc., which handles trading of closely held companies. The Wall Street Journal reported yesterday that Facebook was considering the $10 billion IPO with a valuation of more than $100 billion. The company aims to go public between April and June, the Journal said.

Groupon’s Slump

Demand for technology IPOs reignited in November after a summer lull, setting the stage for Groupon Inc. and Angie’s List Inc. to go public. Groupon, the largest provider of online coupons, has lost 20 percent of its value since its debut at $20 earlier this month.

Groupon’s decline may be spurring other companies to pursue IPOs before they lose the chance, said Josef Schuster, founder of Chicago-based IPOX Schuster LLC. His firm invests in IPOs and oversees about $2.5 billion in assets.

“Groupon has lost a lot of steam and I believe bankers are saying, ‘The market is still hot so let’s do it right now,’” he said.

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