Facebook value seen at US$100 billion

When Facebook makes its long-expected debut as a public company this spring, the social-networking giant will likely vault into the ranks of the largest public companies in the world, alongside McDonald's, Amazon.com and Bank of America.

The Wall Street Journal reported Friday that Facebook is preparing to file initial paperwork for an offering that could raise as much as US$10 billion ($12 billion) and value the company at US$75b to US$100b.

The filing with the Securities and Exchange Commission could come as early as Wednesday, with an initial public offering of stock in three or four months.

The targeted amount would slot it among the world's 25 largest IPOs, although as recently as November 2010, General Motors raised US$15.8b when it shed majority control by the US government.

The IPOs of 14 companies would rank higher than Facebook's, according to investment adviser Renaissance Capital. Among them were Visa's US$17.9b IPO in March 2008, the largest for a US company, and world-topper Agricultural Bank of China, which raised US$19.3b in July 2010, not including extra shares issued to meet demand.

Facebook spokesman Larry Wu said the company will not comment on IPO-related speculation. The Journal had cited unnamed people familiar with the matter.

The Journal also said that Facebook was close to picking Morgan Stanley as the lead underwriter, which would be a setback for rival Goldman Sachs. Both declined comment to The Associated Press.

The buzz surrounding an outsized haul for Facebook's founders, employees and early investors remains a hopeful sign for capital markets following a deep recession. At the reported price, Facebook's IPO would be the biggest for a US internet company ever - topping the debut of one of its main rivals, Google.

''We are expecting 2012 to be a year of recovery for the IPO market led by the Facebook IPO,'' said Kathy Smith, Renaissance Capital's principal.

The event will follow a string of tepid debuts by technology startups including social game maker Zynga and discount advertiser Groupon.

Facebook's will be the most anticipated tech IPO since Google went public in August 2004. Not including shares sold by early investors, the internet search giant raised US$1.2b and grabbed a market value of US$23b, the biggest so far for a US internet company.

The IPO raised US$1.9b, including shares sold by early investors and extra stock issued to meet the heavy demand. It's not known whether Facebook's US$10b target includes shares owned by early investors.

Facebook's reported valuation of US$75b to US$US100b compares with about US$100b for McDonald's, US$90b for Citigroup and Amazon and US$75b for Bank of America. It would exceed the market cap of US$55b for Hewlett-Packard, one of the world's largest technology companies by revenue.

Both Facebook and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.

According to eMarketer, Facebook is expected to grow its share of the US display ad market to about 20 per cent this year from 16 per cent in 2011, above second-ranked Yahoo's expected share of about 13 per cent.

For overall online ad revenue, Facebook is seen grabbing just 8 per cent of the market this year, compared with 45 per cent for Google.

EMarketer estimates that Facebook's ad revenue will grow 52 per cent to US$5.78b this year and will reach US$7b in 2013.

Facebook was founded by Mark Zuckerberg and his college roommates in 2004 and is debuting on stock markets in its eighth year. Google's IPO came six years after being founded by Larry Page and Sergey Brin. When Google turned eight in August 2006, its market cap was roughly US$116b. Today, the company is worth nearly US$190b - down from a peak of about US$235b in November 2007.

Investors may be asked to bet heavily on the belief that Facebook will continue to revolutionise the way people communicate around the globe.

Even with Facebook's heady growth rate, Google had ad revenue last year of more than five times what Facebook is expected to get in 2013. Yet it is Google that is mimicking Facebook in building a rival social network called Plus. Zuckerberg, 27, is already worth US$17.5b, based on the latest estimates from Forbes magazine.

Most of that wealth is drawn from the value of Facebook shares that have traded among a small universe of well-heeled investors that buy stakes in companies before they go public.

- AP