I was duped on a scoop. Word had reached me, from multiple sources, that Mark Zuckerberg had sold $40 million worth of shares in Facebook's $300 million financing round. Not so, we hear: All of the $300 million Facebook raised from Microsoft and Hong Kong billionaire Li Ka-Shing is in the company's bank account, not Zuckerberg's. So why the rumor?
In every startup's life, before it can go public, there's a ritual called the roadshow. NetSuite, an online-software company backed by Larry Ellison, may begin its run as soon as Thursday, having filed an updated prospectus with the SEC detailing its plans to issue shares to the public. The total: As much as $99 million from the sale of 6.2 million shares. One unlikely buyer has already put his money in: Salesforce.com board member Craig Ramsey, who bought $3.5 million from company CEO Zach Nelson and founder Evan Goldberg. Silicon Alley Insider reports that Ramsey's son works at NetSuite, but the purchase is still curious. Also playing the field: Oracle CEO Larry Ellison, who put money into Goldberg's NetSuite and Benioff's Salesforce.com.
Alibaba.com, the most anticipated IPO since Google, dropped almost 18 percent to HK$32.60 as quick-trading investors captured profits. Yesterday, on the first day of trading, Alibaba.com shot up 300% from HK$13.50 at open to HK$39.50. Perhaps investors who bought at the peak paused to look into Alibaba.com's real business. The Chinese B2B site matches up industrial buyers and sellers — want to buy 50,000 metric tons of Brazilian soybeans? Parent company Alibaba Group runs Yahoo China, which I suspect at least some retail investors thought they were buying. But no — Yahoo China wasn't part of the IPO deal.
Alibaba.com, perhaps the most anticipated IPO since Google, nearly tripled in price to HK$39.50 after opening at HK$13.50. If you weren't able to catch any shares, you may get some vicarious plesure from analyst quotes about the company. Hong Kong investors "trade stocks like they're playing at the baccarat table." "There is a total absence of reason and cause" for the high price of the stock. "It's irrational and foolish." Yahoo, which owns 39 percent of parent company Alibaba Group, bought an additional $100 million in Alibaba.com shares. I'm betting they're happy.
Alibaba.com, the business-to-business unit of the Alibaba Group, raised $1.5 billion with its IPO, breaking a record for Chinese Internet companies. The $1.5 billion also makes the public offering the largest tech IPO since Google raised $1.66 billion in 2004. Alibaba's PE ratio, around 55, is a bit Googly as well. Google's shares price it at 52.9 times earnings. One wonders if investors realize that Alibaba's search business wasn't part of the package. [WSJ]
Do you ever stop and feel sad for Friendster? Me either, but if there was any room in your tiny, cynical hearts, you could. Yet another social network that's not the original is talking about taking big money moves. This time it's LinkedIn. CEO Dan Nye recently told Newsweek the company isn't interested in acquisition offers, but that an eventual IPO is likely. The only potential hitch, of course, is Facebook's newfound popularity among business professionals.
Chinese business-to-business website Alibaba.com — of whom Yahoo already owns a hefty chunk — has received $100 billion in offers for its $1.5 billion IPO. What are they, Facebook? This is way more interest, of course, than they can accommodate. But there may not in fact be much substance behind the bids. Unlike American stock debuts, where you actually have to front the cash to make an offer, anyone can make a bid on a Hong Kong IPO without having cash-in-hand. Companies will make absurdly high offers in hopes of getting a larger share of the pie. Regardless, this looks likely to be one of the hottest IPOs to hit the market since VMware and Google. [FT]
Alibaba Group, the Chinese e-commerce giant set to launch an initial public offering of a business-to-business unit on November 6, said it now expects to raise $1.49 billion. That makes it the largest tech IPO since Google raised $1.66 billion in 2004. Alibaba founder and former English teacher Jack Ma hasn't missed the connection.
WEB 2.0 SUMMIT — Facebook CEO Mark Zuckerberg has taken the stage at John Battelle and Tim O'Reilly's Web conference, and he's proved to be game for questions. Battelle, clearly expecting a nonresponse, asks Zuckerberg about his company's financing — the sale of a small stake that would value the company at as much as $15 billion. Instead, Zuckerberg gamely smiles and says, "Great. It's almost wrapped up." The crowd, a bit shocked, breaks into laughter. Battelle then asks about an IPO. Zuckerberg says, "Definitely years out." (Photo by AP/Paul Sakuma)
The new editor at TechCrunch, Erick Schonfeld, has gotten a little IPO-crazy in these heady days of Bubble 2.0. The best guess we've seen on a Huffington Post valuation is $60 million which, for a media company, is a drop in the bucket. We can't remember a tech or media company going public with a valuation anything like that. Huffington Post is the most unlikely IPO candidate since Wired in 1996 — and Wired had substantially more revenues and a real magazine business. Maybe we were onto something with the whole cheese thing. More likely? An acquisition.
Sony's continued financial woes — a projected loss of $630 million in its fiscal fourth quarter — have led it to offer up Japanese insurance subsidary Sony Financial as a sacrificial lamb. It's selling off 33 percent of the company in an initial public offering on October 1, and will use the proceeds to fund its electronics and gaming divisions. Wait: Why was Sony in the insurance business in the first place? [Bloomberg]
What do you do if you are the granddaddy of social networks, having been around for more than a decade, but you aren't getting any bounce from the social-network buzz? Shoot for the moon, of course! Classmates.com, acquired by discount Internet service provider United Online for $100 million in 2004, is being spun off in hopes of raising $125 million in an IPO. With the Valley in thrall to social networks, the IPO market heating up, and Facebook's mythical valuation going ever higher, it's the perfect time for United Online to capitalize on the purchase. But what goes up can also go down. Here's how the IPO play could backfire.
Just like the Perseids that streaked across the sky this weekend, VMware, a boring little software company, is leaving a meteoric trail, up and away, on the stock ticker. Bought by EMC, the storage-hardware maker, in 2003 for a mere $635 million, VMware's backers had hoped to spin it off at a value of $10 billion. A staggering amount — but staggeringly low, it turns out. After the stock started trading today, it jumped from its $29 offering price to $55, almost doubling the company's value before the stock fell back a bit. At its peak earlier in the day, VMware was worth nearly $20 billion. Ashlee Vance of The Register has been tracking the stock live all day, as have others, but lost amidst the tick-tock of the stock price is the answer to this question: What does this mean for the Valley?
Armand Rousso is an international man of mystery — Internet-style. Long before today's Web 2.0 kids were even suckling at their mamas' teats, in the 1980s — or so he claims — he invented e-commerce. Others claim that, at the same time, he invented e-commerce fraud. On an ancient MCI telecom network, he ran something called the International Stamp Exchange — and, claims engineer David Glassman, who says he wrote the code for the exchange, faked all the bids on it to simulate activity. No matter. The purported ruse won Rousso coverage in Time magazine. Now, an e-commerce company he's backing, Accoona, is trying to go public. "Investors should run away screaming," writes Henry Blodget — and he knows a thing or two about investors running away screaming. But he's just looking at the numbers. There's way more to this story — and it all has to do with Rousso's suspicious business dealings.
Sarah Meyers, Valleywag's new videographer, attended Facebook's Lunch 2.0 happy hour and asked Facebookers and other developers what the buzz was all about. She cut through the hype to get the real answer on why Facebook's so hot — the long-rumored IPO, of course.
When Brian Alvey, the cofounder of Weblogs Inc. and a former AOL executive, suggested that AOL change its name to TMZ, the popular gossip blog it owns a stake in, I took it as the throwaway joke it was. But now, some idiot named Bill Hartzer on InternetFinancialNews.com appears to be taking Alvey seriously. For anyone else equally lacking in both sense of humor and sense, let me 'splain something to you. Alvey's idea is, of course, brilliant. But it's not going to happen.
Even more fictitious than Facebook's revenues is its valuation. A market value, after all, requires a willing buyer and a willing seller, and Facebook CEO Mark Zuckerberg, and his board members have repeatedly said they don't want to sell. (Facebook has a valuation as a private company, of course, but trust me, it's nothing near the numbers insiders are bandying about.) So why make up multi-billion-dollar valuations for the company, seemingly out of whole cloth? Because it saves them from having to hear out lowball offers, I imagine — and it also sounds mighty fine in the press. Here's a thought for newly hired number-fudger Gideon Yu, however, as well as that stock-plan administrator Facebook wants to hire: The higher a private company's value, the harder it is to dole out lucrative options to new employees. After the jump, my theory on what Facebook's worth, and why.
