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Winnipeg Free Press - PRINT EDITION
Zuckerberg has plenty to prove with IPO
Paul Sakuma / The Associated Press archives Mark Zuckerberg has billions of reasons to like the IPO. (CP)
FACEBOOK'S $11.8-billion initial public offering will cement the status of 27-year-old Mark Zuckerberg as one of the world's richest men and put his social network among America's highest-valued companies.
Facebook is offering about 337.4 million shares for $28 to $35 each, according to a regulatory filing Thursday. At the upper end of that range, the co-founder's stake would be $17.6 billion, making him richer than Microsoft's Steve Ballmer and Russian steel billionaire Vladimir Lisin, who are both twice his age, according to the Bloomberg Billionaires Index.
Zuckerberg, who began the service at 19 for Harvard classmates in his dorm, built Facebook into the world's most popular social-networking site, topping 900 million users last quarter. Now he must prove he has the leadership skills to deliver enough growth to justify the company's valuation, said Paul Saffo, managing director at Discern Analytics in San Francisco.
"The whole story about the Silicon Valley is hard-working, entrepreneurial tech geeks getting big payoffs," said Saffo, whose firm provides analytics to institutional investors. "The challenge he has is: Can Mark grow as quickly as his company has grown? And can Mark grow faster than his company has grown? Because, of course, that's what a leader must do."
Zuckerberg, who has a reputation for introducing new products quickly, helped the company supplant MySpace as the most popular social service while also navigating competitive threats from Google, Twitter and other social-media sites. The company has expanded its appeal by enabling developers to build applications on top of the platform, offering music, movies, e-commerce options and other extras to users.
"They stayed nimble, like a startup of a smaller size," said Jeremiah Owyang, an analyst at Altimeter Group. "The culture encouraged them to experiment and innovate on a regular basis, even when they had the lead."
Facebook's IPO would value the company at as much as $96 billion. It is offering 180 million of the shares, while existing owners such as Accel Partners and Digital Sky Technologies are offering 157.4 million shares, according to the filing. Zuckerberg is offering 30.2 million of his 533.8 million shares. The majority of his net proceeds will be used to pay taxes associated with exercising a stock option.
He may control about 57 per cent of the voting power of Facebook's outstanding capital stock after the offering, according to the filing.
Zuckerberg has shown patience in bringing Facebook to the brink of an IPO. After starting the company in 2004, he rolled it out to other college campuses, reaching one million users by the end of the year. Zuckerberg also received a key investment from Peter Thiel, who made much of his wealth as a co-founder of online-payments service PayPal, later sold to eBay.
In 2006, Zuckerberg opened up the service so anyone could join. Facebook accumulated 12 million users by year's end. Zuckerberg was able to woo other investors, including software company Microsoft, Accel and Russian investor Digital Sky, to handle the growing user base.
Facebook, while preparing for the IPO, has remained active on other fronts. After being sued by Yahoo in March for patent infringement, the company has been looking to buy intellectual property from other owners.
-- Bloomberg News
Republished from the Winnipeg Free Press print edition May 5, 2012 B17
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