Mark Zuckerberg: Know Facebook's social mission before investing

In Facebook's IPO filing on Wednesday, Mark Zuckerberg described the culture and purpose of the company he co-founded eight years ago and why he thinks going public is a good move.

"Facebook was not originally created to be a company. It was built to accomplish a social mission -- to make the world more open and connected," Zuckerberg said in a 2,173-word letter included in the company's S-1 filing with the SEC. "We think it's important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do."

Zuckerberg's letter, depending on your viewpoint, is either a mission statement for a company that seeks to make the Internet and the offline world a more open and democratic place, or a long-winded piece of propaganda from a company that wants to mine our personal data to make a profit.

The 27-year-old CEO said in the letter that the Menlo Park-based tech giant was also built not as a company that simply wants to make money, but rather as a company that wants to make money so it can keep building a better Facebook.

"I started off by writing the first version of Facebook myself because it was something I wanted to exist," he said. "Since then, most of the ideas and code that have gone into Facebook have come from the great people we've attracted to our team.

"Most great people care primarily about building and being a part of great things, but they also want to make money. Through the process of building a team -- and also building a developer community, advertising market and investor base -- I've developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.

"Simply put: We don't build services to make money; we make money to build better services."

Facebook: 'substantial complexities' to entering China

Mark Zuckerberg has a Chinese girlfriend and told Oprah Winfrey he was taking Chinese lessons, but that doesn't mean he'll be taking his social media network into China any time soon.

In its IPO filing Wednesday, Facebook Inc. said it would continue expanding its operations abroad and noted that Facebook is currently available in 70 languages and has offices or data centers in more than 20 countries. 

The company noted that while it will "continue to evaluate entering China," the market there has "substantial legal and regulatory complexities that have prevented our entry into China to date." 

"If we fail to deploy or manage our operations in international markets successfully, our business may suffer," Facebook said. "In addition, we are subject to a variety of risks inherent in doing business internationally." 

Those risks, Facebook said, include political, social or economic stability; fluctuations in currency exchange rates; burdens of complying with foreign laws; and difficulties in staffing and managing global operations.

There has been been no secret to Facebook's interest in breaking into China, which has hundreds of millions of Internet users and is relatively new to social networking.

Zuckerberg took a widely publicized vacation to China in December 2010, where he met with top technology executives in Beijing, including the CEO of leading Chinese Web portal Sina Corp. and the chairman of state-owned telecommunications carrier China Mobile Ltd.

The Chinese government has blocked access to Facebook to its citizens since 2009. 

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-- Andrea Chang

Twitter.com/byandreachang

Photo: Mark Zuckerberg at Harvard University in November. Credit: Kelvin Ma / Bloomberg

Facebook cites Google+, Twitter among rivals, says growth will slow

Facebook Inc. is king of the social media world now, but the tech giant is looking over its shoulder.

In its S-1 filing Wednesday, Facebook said its business was "highly competitive" and that the competition "presents an ongoing threat to the success of our business."

"We face significant competition in almost every aspect of our business, including from companies such as Google, Microsoft and Twitter, which offer a variety of Internet products, services, content and online advertising offerings, as well as from mobile companies and smaller Internet companies that offer products and services that may compete with specific Facebook features," the company said.

Facebook said it also faced competition from "traditional and online media businesses for advertising budgets" as well as social networks such as Google+ and regional sites. Facebook said some of its current and potential rivals "have significantly greater resources and better competitive positions in certain markets than we do."

"These factors may allow our competitors to respond more effectively than us to new or emerging technologies and changes in market requirements. Our competitors may develop products, features or services that are similar to ours or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies," the company said. "As a result, our competitors may acquire and engage users at the expense of the growth or engagement of our user base, which may negatively affect our business and financial results."

Facebook also said it expected its growth rates to decline in the future. It said annual revenue grew 154% from 2009 to 2010 and 88% from 2010 to 2011.

"Our user growth and revenue growth rates will inevitably slow as we achieve higher market penetration rates, as our revenue increases to higher levels, and as we experience increased competition," Facebook said. "As our growth rates decline, investors' perceptions of our business may be adversely affected and the market price of our Class A common stock could decline."

Here's the S-1 filing.

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-- Andrea Chang

Twitter.com/byandreachang

Photo: Facebook's chalkboard wall at its new campus in Menlo Park, Calif. Credit: Mark Boster / Los Angeles Times

Facebook says ticker symbol will be FB, annual revenue $3.7 billion

Facebook Inc. finally filed its long-awaited S-1 on Wednesday afternoon and revealed lots of juicy details about the company. The social media giant also disclosed its ticker symbol, FB, but did not say whether it would be listed on the Nasdaq or New York Stock Exchance -- it could be weeks or months before that is determined.

Here's a quick rundown of Facebook's pertinent numbers, according to the filing: 

Users: 845 million, of which 483 million are daily users

Annual revenue: $3.7 billion

Operating income: $1.8 billion

Profit: $1 billion

If you'd like to dig through the filing yourself, you can find it here. Keep checking back for more updates.

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Photo: A worker at Facebook's headquarters in Menlo Park. Credit: Paul Sakuma/AP Photo

Facebook files for IPO

Status update: Facebook has filed papers for what's expected to be the largest initial public offering ever to come out of Silicon Valley and one of the largest in U.S. history.

Ending months of breathless speculation, the 8-year-old social networking company has submitted registration documents with the U.S. Securities and Exchange Commission that set preliminary goal of $5 billion.

Facebook had discussed raising as much as $10 billion. Final pricing will not be set for months, and the size of the IPO probably will increase with investor demand.

The filing sets the stage for an IPO in May.

The important stats right off the bat: 845 million users; 483 million daily users; annual revenue of $3.7 billion; $1.8 billion in operating income and $1 billion net income.

Facebook selected Morgan Stanley as its lead bank to handle the IPO with assistance from four others. Morgan Stanley's resume of recent Internet IPOs includes Groupon and Zynga. Investment banks will receive as much as $500 million in fees depending on the valuation.

Now the frenzy to own a piece of Facebook, already off the charts on private trading exchanges, promises to get even more clamorous.

Facebook, one of the world's best-known brands, is an international phenomenon, touching the lives of more than 800 million people around the globe.

The IPO was inevitable. Facebook had tripped the regulatory wire that forces companies with more than 500 shareholders to disclose almost as much information as publicly traded companies.

The registration documents spell out how much the company intends to raise and what it intends to do with the money and gives the first official glimpse into the company's financial performance.

The IPO will create enormous wealth in Silicon Valley and more than 1,000 new millionaires among the company's 3,000 employees, which many hope will give a boost to the local economy including the housing market and car sales.

Everyday investors are also hoping that as friends of Facebook they will get a chance at a piece of the IPO.

Young technology companies like to say they do things differently. In June when Groupon filed for an IPO, founder Andrew Mason said: "We are unusual and we like it that way."

Google's owner's manual for investors contained a letter to investors from co-founders Larry Page and Sergey Brin offering a similar warning. "Google is not a conventional company. We do not intend to become one."

Page and Brin thumbed their noses at Wall Street by demanding an IPO that would be open to all investors. Google used a Dutch auction, which meant that the general public had a better shot at buying the stock before the shares began trading, rather than giving access only to the investors handpicked by the investment bankers.

Facebook is unlikely to hand over control to its Wall Street bankers and is expected to stay true to the vision that founder and Chief Executive Mark Zuckerberg dreamed up in his Harvard dorm room.

Facebook created a dual-class stock structure that ensures that Zuckerberg, a hands-on leader, will remain in firm control of Facebook and continue to make key decisions.

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Photo: A spray-painted image of founder and Chief Executive Mark Zuckerberg at Facebook's Menlo Park, Calif., campus. Credit: Mark Boster / Los Angeles Times

Facebook IPO: 'FB' on Nasdaq or NYSE?

Questions, questions, there are so many questions surrounding Facebook's expected initial public offering.

Of course, the main question is when will the world's largest social network file its S-1 paperwork for its IPO. Well, this much we know — it isn't happening this morning as was widely expected.

Kara Swisher, over at the website AllThingsD, bluntly called the salivating tech press out on their expectation of an early Wednesday IPO filing (with a little help from Samuel L. Jackson). Swisher reported that her sources say Facebook's IPO will arrive Wednesday afternoon at the earliest. So it'll arrive today or it won't — got that?

But other questions abound too. Such as how big will the IPO be? For months rumors have pointed to a Facebook IPO of about $10 billion, which would place the company at a valuation of about $100 billion. But on Tuesday, the website International Financing Review reported that Facebook is instead planning on an IPO worth about $5 billion instead.

Like Swisher, the IFR gave itself an out in case $5 billion isn't the number after all, stating the while $5 billion is "less than anticipated" the IPO "could be increased to satisfy ultimate investor demand."

Another question is where Facebook's stock will trade — the New York Stock Exchange or Nasdaq. Both Bloomberg Businessweek and the New York Post have documented the two stock markets essentially fighting to lure Facebook.

So what's at stake for the NYSE and Nasdaq? "Winning it means more fees, a boost in trading and the chance to link their brand with the largest social networking site in the world," Bloomberg Businessweek said.

"It's a very heated battle," the New York Post quoted Larry Tabb, founder of the capital markets advisory firm Tabb Group, as saying. Tabb told the Post that competition between the two markets is too close to call. So far, Facebook hasn't said where it's shares will pop up when they do.

Another question, and one the Post says it has an answer to, is what will Facebook's ticker symbol be — Fbok, FBK, Book, FceB? According to the newspaper, it won't be any of those. Instead, it will be "FB," the Post says.

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-- Nathan Olivarez-Giles

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Photo: A door sign at Facebook headquarters in Menlo Park, Calif. Credit: Paul Sakuma / File / Associated Press

Facebook charging 'stratospheric' attorney fees, Paul Ceglia says

Paul Ceglia, fined last month for failing to turn over evidence in his case against Facebook, is protesting the "stratospheric" legal fees from Facebook's lawyers.

Ceglia, who contends he's entitled to half of Mark Zuckerberg's multibillion-dollar stake in Facebook, said he should not have to pay as much as $716 an hour to Facebook's highest-billing partner.

U.S. Magistrate Judge Leslie Foschio said last month that Ceglia must reimburse Facebook for legal fees it incurred in trying to get him to comply with a court order in the partnership dispute.

Ceglia's lawyer, Dean Boland, said in court papers that the fees are unjustified.

A Facebook spokesman declined to comment.

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Photo: The Facebook sign outside the company's new campus in Menlo Park, Calif. Credit:  David Paul Morris / Bloomberg 

Facebook builds lead in display ads as its IPO approaches

With the filing for its initial public offering expected any day now, Facebook Inc. is extending its lead in online display advertising, which makes up the bulk of its revenue.

The social networking giant’s share of the U.S. online display advertising market grew to nearly 28% for 2011, up from 21% a year earlier, according to research firm ComScore Inc.

Facebook has stayed ahead of Yahoo Inc., which has 11% of the display ad market — and far ahead of Google Inc. and Microsoft Corp.,  each of which has less than 5%, according to ComScore.

Facebook surpassed Yahoo for the first time in 2009, said Andrew Lipsman, ComScore’s vice president of marketing and industry analysis.

The new numbers show that Facebook is persuading Madison Avenue to funnel ad dollars into social media, he said. That success can be credited to Facebook Chief Operating Officer Sheryl Sandberg, a former Google executive who has been instrumental in convincing advertisers that ads on Facebook are far more persuasive because they come via a friend.

Facebook — which has more than 800 million users — also can target ads using personal information that people volunteer on their user profiles and information Facebook gathers on how people spend their time on the site. In addition, brands can form connections with consumers for free through fan pages they create on the service.

Lipsman said the ComScore research puts into perspective how Facebook has come to dominate display advertising.

“If we think back a couple of years, large brands were hesitant to use social media channels. Fast forward to today, and that has really reversed itself,” Lipsman said. “Almost 3 out of every 10 ads or so are on Facebook.”

That’s the kind of message Facebook wants to send to Wall Street as it prepares to file papers this week with the Securities and Exchange Commission for an initial public offering. The company is looking to raise as much as $10 billion in an offering that could make Facebook worth as much as $100 billion.

Facebook also collects revenue from its virtual payment system called Facebook credit.  And the company takes a 30% cut of revenue generated by game developers on its site.Facebook’s total revenue in 2011 was about $4.3 billion, according to estimates from research firm EMarketer.

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Photo: Sheryl Sandberg, Facebook’s chief operating officer, is credited with driving the company’s online advertising business. Credit: Chris Ratcliffe / Bloomberg

Facebook, Google, other firms team to fight email phishing scams

Major tech firms including Google, Facebook and Microsoft have teamed together to fight email phishing scams. Members say the partnership will lead to better email security and protect users and tech brands from fraudulent messages.

The group, which calls itself DMARC -- for Domain-based Message Authentication, Reporting & Conformance -- says it wants to help reduce email abuse by standardizing how email receivers perform authentication. Now, email senders will get consistent authentication results for their messages at Gmail, Hotmail, AOL and any other email receiver using DMARC.

Email phishing scams are messages designed to trick recipients into providing personal information by replying or clicking on links. The emails look like they come from a legitimate sender, often featuring brand logos and mimicking the format and language of authentic messages.

With the rise of social media and e-commerce sites, spammers and phishers have "a tremendous financial incentive" to compromise user accounts, leading to theft of passwords, bank account information and credit card numbers, DMARC said.

"Email is easy to spoof and criminals have found spoofing to be a proven way to exploit user trust of well-known brands," the group said. "Simply inserting the logo of a well-known brand into an email gives it instant legitimacy with many users."

Other companies involved in DMARC include Bank of America, LinkedIn, PayPal and Yahoo.

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Facebook IPO filing reportedly due 'as early as next week'

Facebook's initial public offering has been anticipated for months and is speculated to be worth as much as $10 billion whenever it arrives.

And right about now, that's the biggest question for the world's largest social network -- when will the IPO filing arrive?

According to a Friday report from the Wall Street Journal, citing unnamed sources, Facebook could file for its IPO "as early as next week."

When next week? The Journal says "Facebook could file papers for the IPO as early as this coming Wednesday, but that timing is still being discussed, said a person familiar with the matter."

Facebook, for its part, hasn't said when its inevitable IPO will arrive, but the rumor mill is in high gear.

On Wendesday, multiple reports said that the Menlo Park, Calif., company had temporarily suspended trading of company shares on private markets so it could tally up just how many shareholders it has -- a move sometimes made ahead of an IPO.

The IPO is expected to be the largest of the year and possibly the decade and, as noted by the Times' Jessica Guynn and Walter Hamilton, it could turn as many as 1,000 Facebook employees into millionaires. Facebook has more than 800 million users worldwide and it's expected to also reach 1 billion users soon as well.

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Photo: Facebook's thumbs-up "Like" icon is displayed on a sign at the company's new campus in Menlo Park, Calif. Facebook hopes to accommodate over 6,000 employees on the new campus, which is spread out over a million square feet of office space. Credit: David Paul Morris/Bloomberg