10 Letdowns From The Facebook IPO Filing4:42 PM EST Thu. Feb. 02, 2012
Once every hundred years, an IPO filing comes along that is both a milestone to the tech industry and a letdown at the same time. Facebook’s S-1 filing with the SEC on Feb. 1 manages to accomplish both with the ease of a poke.
Included in the S-1 statement, among the financials, boilerplate safe harbor statements and risk factors, is an intimate letter from Mark Zuckerberg to Planet Earth. It starts, “Facebook was not originally created to be a company.” (Was it created to become a movie, then?) In more than three dozen paragraphs, Zuckerberg sounds apologetic for about to become one of the richest men in America. That’s not the best of ways to inspire potential investors.
Facebook provided its CEO with compensation of “approximately $692,679 for costs related to personal use of aircraft chartered in connection with his comprehensive security program and on which family and friends flew during 2011.” So much for apologies about being rich.
See kids, it really does pay to Friend your Dad on Facebook:
“Molly Graham, the daughter of Donald E. Graham, a member of our board of directors, is employed by us. During 2009, 2010, and 2011, Ms. Graham had total cash compensation, including base salary, bonus and other compensation, of $98,058, $133,620, and $189,168.”
Reports Facebook: “In light of our status as a controlled company, our board of directors has determined not to have an independent nominating function and has chosen to have the full board of directors be directly responsible for nominating members of our board, and in the future we could elect not to have a majority of our board of directors be independent or not to have a compensation committee.”
There’s a reason good companies opt for independent directors, and Facebook should take that to heart.
Zynga, the maker of Farmville and Words with Friends, counts for 12 percent of Facebook’s annual revenue – or about $400 million. It’s hard to know whether that’s a worse statement about Facebook’s risk mitigation or about humanity’s taste in entertainment.
Facebook estimates that the number of mobile monthly users is near 500 million per month and growing. The company suggests if the trend continues, mobile Facebook users – who are not now served ads like PC users – may start seeing them show up in apps.
Facebook gives Twitter three passing mentions as a competitor, but goes into more detail about the potential threat it faces from Google +, the search giant’s relatively new social networking service. A market share showdown between Twitter and Facebook would have been fun, but it looks like Facebook isn’t too worried.
Facebook owns its own data centers in North Carolina and Oregon (and spent a good deal of $860 million in costs last year on them.) That’s the good news. The bad news: data centers eat money because of their continual need for upgrades in performance, security, hardware, software and more.
Facebook claims responsibility for involving itself in “100 million friendships.” Hyperbole is best suited for venues other than an S-1 filing. Besides, how would those guys know which are really “friendships?”
Facebook has selected the stock ticker symbol “FB.” That’s logical. We were hoping for something along the lines of “POKE,” however.