Facebook Contemplates a Big Status Update: The Ticker

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By Kirsten Salyer

After a tough year for Internet-company initial public offerings, Facebook Inc. is considering what could be the largest Internet IPO on record. Like the cautious roll-out of its new Timeline feature, the social-networking site is making sure that, if it updates its status to public next year, investors will be ready.

Facebook is considering a $10 billion public offering that would value it at more than $100 billion, Bloomberg News reports. With its more than 800 million users, brand integration, strong ad sales and a platform designed to keep users on the site, Facebook is hoping its shares will stay above the opening-day price, a feat that other Internet companies were unable to achieve this year. LinkedIn Corp. and Groupon Inc. both had successful offerings but their shares are now well below the first day's trading prices. LinkedIn is more than 24 percent below its May debut, and Groupon is almost 18 percent below its first trades in November.

Globally, the amount raised through IPOs declined 38 percent to $155.8 billion in 2011, compared with $252 billion in 2010, according to Bloomberg data. Facing an uncertain market, some technology companies, including LivingSocial.com, chose to raise money privately instead. So why should Facebook take the plunge in 2012?

IPOs generate funds for expansion, which would allow Facebook to continue introducing new features and form partnerships to make the site a more integrated part of a user’s web experience. More revenue would also give Facebook a greater edge over rival Google+, which became available to the public in September. Google's social-networking site adds about 625,000 new users a day and may have 400 million members by the end of next year.

Facebook already boasts a steady growth in membership and strong brand loyalty. “Facebook” was the most searched word in 2011, according to online intelligence service Experian Hitwise. One out of every seven minutes online and three out of every four minutes on social networking sites is spent on Facebook, Mashable reports. More time on the site means more advertising revenue, which is based on a cost-per-impression model.

Facebook is taking steps to amp up its advertising revenue, which comprises almost 90 percent of its 2011 sales, according to market research firm EMarketerInc. Last week, Bloomberg News reported possible plans for Facebook to start mobile advertising by the end of March. We may start seeing Sponsored Stories ads, which show friends’ interaction with brands, in our news feeds beginning in January 2012, Business Standard reports.

With Facebook and at least 14 other Internet companies considering IPOs in 2012, the industry could raise $11 billion through IPOs next year, the largest amount for Web-related companies since 1999, Bloomberg News reports. With the new Subscribe feature that lets users post and follow public status updates, the site’s users are adjusting to public sharing. It could be Facebook’s turn to adjust in 2012.

(Kirsten Salyer is the social media editor for Bloomberg View.)

-0- Dec/29/2011 14:37 GMT