Facebook may postpone its expected initial public offering until next fall, so the company can focus on products, rather than be distracted by the major event.
CEO Mark Zuckerberg told the Financial Times he would prefer to wait until at least September or later of next year so employees can remain focused on product development, rather than a payout.
Delaying the IPO, expected to be one of the world’s biggest with recent private share sales estimated at $65 billion, may also be good for business reasons. An IPO is often meant to generate money, something the blockbuster social network doesn’t seem to need, and operations for private companies are easier to manage than for a public one.
“There are so many things you don’t have to do until you take public shareholder money,” said Lise Buyer, a consultant to advised Google through its IP process. “You don’t have to take investor phone calls or show up at investor conferences.”
For these reasons, many analysts advise against an IPO unless absolutely necessary to comply with Securities and Exchange Commission regulations. Once a company accrues more than 500 shareholders, it must file public financial results in the first quarter following that year, according to the SEC.
Facebook surpassed the 500 number in January when Goldman Sachs became an investor, meaning the social network will likely file financial numbers by April 2012.
The publication of those reports may generate publicity and renewed market interest, making the following months an opportune time to begin an IPO.
Currently, the privately-held Palo Alto, Calif.-based company doesn’t disclose financial results. Last week, though, reports revealed Facebook’s revenue doubled to $1.6 billion in the first half of this year.
Some of the projects Zuckerberg may have in mind for added focus may include the recently debuted Facebook Credits gaming program, a virtual payment system that takes 30 per cent cut of online purchase revenue, and the recently announced efforts to ramp up media streaming on its platform to allow online music services like Spotify to publish user activity on Facebook pages.
Facebook’s burgeoning media expansion, which will likely include music, films and new gaming revenue streams, will keep employees very busy, while its business executives ready the social network for one of the biggest IPOs in history.
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