Cashing Out: Week of November 17th – December 3rd 2011 in Online Marketing News

Facebook IPO coming in 2012

As the Wall Street Journal (WSJ) reported November 29, Facebook is setting a time frame between April and June of 2012 for its stock market debut.

Citing “sources familiar with the matter,” the WSJ says Facebook is looking to raise $10 billion in its IPO, which it hopes “will value the company at more than $100 billion.”

Naturally, the IPO is being touted as possibly one of the largest ever, with the WSJ noting that a $100 billion valuation would be more than twice that of Hewlett-Packard’s or 3M’s. And, as Mashable pointed out, it would be worth more than four times Google’s 2004 $23 billion IPO.

Mark Zuckerberg himself, who owns a 24 percent stake in the company, stands to make $24 billion if the IPO goes through at the estimated valuation.

So, with the general consensus that a Facebook IPO will be huge, no matter what, could there be a fly in the ointment? Facebook has remained privately-held for some time, “thanks in large part to co-founder Mark Zuckerberg’s desire to keep the company free from external influences which might be distracting and harmful,” says Econsultancy.

Stressing the fact that much of Facebook’s success has resulted from its long-term way of thinking, TechCrunch posits that “stock could fall into the hands of those who don’t have the service’s long-term success in mind. Even just 10 percent outside control could add a lens of ‘what will this do to the stock price?’ to every decision.”

That, TechCrunch says, could hinder the forward thinking and long-term planning that has helped Facebook become what it is today, and ultimately hurt the company.

Facebook will have to make its financial information public before April, when the company crosses the 500-shareholder limit. And though they can still hold off on their IPO after doing so, that is unlikely, says the WSJ:

“Board members and top executives have acknowledged that it would leave the company at a severe disadvantage, since they would have most of the liability that comes with being a public company, but lose on the fundraising benefits of a public offering.”

Silver Lake, Microsoft seek Yahoo minority stake

According to a November 28 article from the New York Times‘ (NYT) Dealbook , it is seeming less and less likely that Yahoo will sell as a whole, although the chances that the company will make some sort of deal with Microsoft do seem to be on the rise.

The article cites “people briefed on the matter” who say that “a consortium of investors led by private equity firm Silver Lake and Microsoft is one of several parties that will be submitting a plan to take a minority stake in Yahoo.”

Among those other parties, says the NYT, is another private equity firm, TPG Capital. The two proposals could see either group take a stake of up to 20 percent in the company. Though, reportedly, Yahoo would then take on debt so it could accomplish a stock buyback.

“Coupled with the roughly 10 percent stake that is held by Yahoo’s co-founders, Jerry Yang and David Filo, the maneuver would effectively give the winning investor group a majority holding,” says the NYT.

Though the article says the possibility of  all of Yahoo being sold is not entirely out of the question either.

Alibaba, in which Yahoo owns a 40 percent stake, is said to be in discussion with yet another private equity firm, Blackstone Group, about a bid for the entire company. And though it appears that Yahoo is increasingly shying away from a complete acquisition, the NYT says “some Yahoo shareholders are likely to look askance at any minority investment.”

They cite Daniel S. Loeb’s hedge fund Third Point, which in a November letter told Yahoo’s board that they were deeply concerned about such an eventuality.

Facebook settles over FTC privacy issue

In a statement on Facebook’s blog, Mark Zuckerberg confirmed that the social network has settled with the FTC over charges of privacy violation.

With the eight counts brought against the company, the FTC claimed Facebook had deceived users about its privacy policy, and shared personal information with third parties without users’ consent. There were also accusations that Facebook had claimed to secure apps with the help of a program when, in fact, they didn’t.

Appropriately, Zuckerberg responded with humility. Though he stood by his company’s “history of providing transparency and control over who can see your information,” he acknowledged, “we’ve made a bunch of mistakes.”

And, in response to these admitted gaffes, Zuckerberg says Facebook has already addressed some of the problems but that it will be going further,  applying FTC recommendations:

“The FTC also recommended improvements to our internal processes. We’ve embraced these ideas, too, by agreeing to improve and formalize the way we do privacy review as part of our ongoing product development process. As part of this, we will establish a biennial independent audit of our privacy practices to ensure we’re living up to the commitments we make.”

As such, Facebook will undergo audits every 2 years for the next 20 years.

In addition, privacy options will now have to be opt-in, rather than opt-out, says TechCrunch, with Facebook “required to obtain consumers’ affirmative express consent before enacting changes that override their privacy preferences.”

But Zuckerberg also announced significant change to the company’s structure that will split the job of its Chief Privacy Officer into two roles – Chief Privacy Officer, Policy, and Chief Privacy Officer, Product.

As part of the settlement, TechCrunch reports, Facebook will also be bound by the following requirements and strictures:

“– barred from making misrepresentations about the privacy or security of consumers’ personal information;

– required to obtain consumers’ affirmative express consent before enacting changes that override their privacy preferences;

– required to prevent anyone from accessing a user’s material no more than 30 days after the user has deleted his or her account;

– required to establish and maintain a comprehensive privacy program designed to address privacy risks associated with the development and management of new and existing products and services, and to protect the privacy and confidentiality of consumers’ information; and

– required, within 180 days, and every two years after that for the next 20 years, to obtain independent, third-party audits certifying that it has a privacy program in place that meets or exceeds the requirements of the FTC order, and to ensure that the privacy of consumers’ information is protected.”

WordPress rolls out WordAds

Blogging platform WordPress announced November 29 that it is at last launching its own ad format, WordAds, in partnership with Federated Media.

The ad format will give bloggers the option to monetize, though, according to the sign-up page, not everyone is eligible: “Only publicly visible blogs with custom domains will be considered for this program […] Selection will be based on level of traffic and engagement, type of content, and language used on a blog. Some blogs may not be accepted.”

And though the name might have you feeling a little dyslexic, WordPress is intent that you not confuse WordAds with any similar Google product. In what TechCrunch described as “a fair bit of snark directed at Google,” WordPress’ Jon Burke wrote on the company blog that:

“Over the years one of the most frequent requests on WordPress.com has been to allow bloggers to earn money from their blog through ads.

We’ve resisted advertising so far because most of it we had seen wasn’t terribly tasteful, and it seemed like Google’s AdSense was the state-of-the-art, which was sad.

You pour a lot of time and effort into your blog and you deserve better than AdSense.”

Ouch.

Still, as Mashable noted, “Burke, however, didn’t divulge any details about how WordAds would be different from AdWords. Instead, the post merely directs users to fill out a form if they’re interested.”

AT&T struggles to hold on to T-Mobile acquisition

After saying they would be withdrawing their FCC application for the acquisition of T-Mobile last week, AT&T has been working this week to downplay the findings of a critical, 100-plus-page report on the proposed merger issued by the FCC.

An unnamed agency official told the New York Times (NYT) on November 29 that the “report compiled by the commission’s staff showed that AT&T had not demonstrated that the merger’s public benefits would exceed its costs.”

The report calls the proposed merger between the second and fourth largest wireless carriers in the US a “cause for serious concern,” and claims that the companies “have failed to meet their burden of demonstrating that the competitive harms that would result from the proposed transaction are outweighed by the claimed benefits.”

Meanwhile, as TechFlash reported, “AT&T has fired back with allegations that the report is a ‘one-sided’ advocacy piece that ‘cherry-picks facts to support its own views.'”

By way of response, AT&T’s Senior Executive VP, External and Legislative Affairs, James Cicconi, penned the following official statement, attacking the FCC’s credibility as an unbiased agent:

“We expected that the AT&T-T-Mobile transaction would receive careful, considered, and fair analysis. Unfortunately, the preliminary FCC Staff Analysis offers none of that. The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis.

In our view, the report raises questions as to whether its authors were predisposed. The report cherry-picks facts to support its views, and ignores facts that don’t. Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact. This is clearly not the fair and objective analysis to which any party is entitled, and which we have every right to expect.”

Considering the fairly obvious antitrust issues the merger raises, Cicconi’s criticism may be little more than a waste of energy, and AT&T seems to be aware of that.

On the brink of losing the deal entirely, and of having to pony up $4 billion in breakup fees, AT&T is now attempting what the NYT Dealbook is calling an 11th hour deal, and a Hail Mary pass.

According to the article, which cites people involved in the negotiations, the company is trying to sell a large part of T-Mobile’s customer accounts to Leap Wireless:

“AT&T hopes such a deal would placate the Justice Department enough for it to drop its opposition to AT&T’s acquisition of T-Mobile, these people said, or at least to strengthen AT&T’s hand if it goes to trial. The deal would make Leap the fourth-largest wireless carrier in the nation, but it would allow AT&T to retain enough of T-Mobile’s valuable wireless spectrum, which it says it badly needs to provide the kind of next-generation service that its customers expect, these people said.”

Google gets in on Amazon’s game

Google’s latest foray may leave Amazon a little uncomfortable. That’s because the search giant is hatching a plan to encroach on what has traditionally been Amazon’s territory – ecommerce.

The Wall Street Journal (WSJ) reported December 2 that “people familiar with the matter say Google “is in talks with major retailers and shippers about creating a service that would let consumers shop for goods online and receive their orders within a day for a low fee.” This would be in direct competition with Amazon’s Prime service, which gives users free 2 day shipping for all orders  for $79 a year.

According to Mashable, Google is already in talks with Macy’s, Gap, OfficeMax, and others about the service. What’s more, the WSJ says the service would let shoppers know if specific store locations have a certain product in stock and if that product can be shipped within a day, and then display the option for quick shipping.

And though Econsultancy notes that this “might seem like a huge distraction for the world’s largest search engine,” they nonetheless posit that “it would keep shoppers from going directly to Amazon for product search.”

Facebook buys Gowalla

According to a December 2 report from CNN Money, Facebook has acquired location-based service provider Gowalla for an undisclosed sum. The source cited is described as being “close to Gowalla,” though Facebook has not yet confirmed the deal. “We don’t comment on rumor and speculation,” a company spokesman told CNN.

The report says the Gowalla team will be working with Facebook on their new Timeline feature. This makes sense, says TechCrunch, as Gowalla’s current product aims at “creating Stories around the places you and your friends have visited, clustering together photos that show off your adventures,” which is not too far off from what Facebook is trying to accomplish with Timelines.

CNN’s source says that, while some employees will relocate to Facebook’s Palo Alto headquarters, others will remain in Austin (Facebook has an office there too.) Though, TechCrunch’s Jason Kincaid says “it’s also unclear whether this is an ‘acqui-hire,’ or if Facebook is also interested in any of Gowalla’s technology. My hunch is that it’s the former.”

 

About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined ReveNews.com. Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
Find Emily on Twitter @EditorWilkinson

6 Responses to Cashing Out: Week of November 17th – December 3rd 2011 in Online Marketing News

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  6. TestiVar.com says:

    Timing will be very important to their initial market value.  It is a risky time to do an IPO regardless, but we don’t even have a light at the end of the tunnel.

    I also suspect that Facebook.com will saturate and fall from it’s #2 position behind Google on the net within the next year or so, so they need to IPO before there is any kind of hint of a downward slope.