Posted on 20 May 2012.
Today: Facebook upsizes its IPO, Apple (AAPL) reportedly will make the iPhone bigger, and Google (GOOG) will offer more in its search results.
Facebook adds more shares as investors clamor for IPO
Another day closer to Facebook’s initial public offering, another updated filing from the world’s largest social network that changes key details of its IPO.
The Menlo Park company will sell roughly 84 million more shares to investors than it had previously planned, according to Wednesday’s filing, after raising the proposed price of its initial shares Tuesday. Facebook is now planning to sell slightly more than 421 million shares at $34 to $38, though the company could still sell the shares 20 percent higher than the top of that range without filing yet another amendment to its Securities and Exchange Commission documents.
Facebook’s IPO gets bigger, but the company won’t offer the additional shares or share in the proceeds: the additional shares, along with another 10 million shares added to the overallotment option available to banks in charge of the sale, are all coming from early Facebook investors, mostly venture capitalists. Peter Thiel, famously depicted as the first big investor in Facebook in “The Social Network,” more than doubled the number of shares he is selling, from 7.7 million to 16.8 million. Accel Partners partner James Breyer will sell 49 million shares instead of 38.1 million; Russian billionaire Yuri Milner’s investment firm, DST Global, pushed its sale to 45.7 million from 26.3 million, while the Russian Internet titan he founded, Mail.ru Group, will also increase the shares it sells. Institutional investors Goldman Sachs and Tiger Global, among others, also increased the stakes they will sell.
While the additional shares allow individual investors — who have been clamoring for shares — a better chance of claiming a slice of the company, the bigger exit for early investors scared some analysts.
“The basic question you have to ask is, ‘Do you want to buy a company where all the insiders are heading for the door?’ ” University of Oxford professor Tim Jenkinson told the Wall Street Journal.
“When you see insiders unloading their stakes, you start to wonder why. I could see it turning some institutional investors off,” Greenwood Capital Chief Investment Officer Walter Todd told Bloomberg News.
Then again, demand for those shares are too high to believe that higher cash-outs by early investors will change anyone’s mind.
“An increasing number of institutional investors are looking beyond the value of the business today and looking at the future growth,” Samuel Schwerin, managing partner at Millennium Technology Value Partners, told Bloomberg on Tuesday. “Those drivers are extraordinary in size, including international and mobile and commerce.”
That drive for a piece of Facebook is obvious in the fact that almost all the banks taking orders had closed off orders by the time the markets closed Wednesday, according to Reuters. with all the orders in and shares being divvied up, little is left but to state the final price of the shares — expected Thursday, but possible earlier, including Wednesday evening — and start raking in the cash. if Facebook sells all the shares offered, including the overallotment, at the top of its latest stated range, it would bring in up to $18.4 billion at a valuation of $104.1 billion.
Numbers like those, and all the hype about a record-setting IPO out of Silicon Valley, have observers attempting to frame the discussion outside of financial terms.
“This is much more a spectacle, a media event and a cultural moment than it is an IPO,” GreenCrest Capital analyst Max Wolff told Reuters. “This is not a game of models and fundamentals at this point.”
Apple ordering larger screens for iPhones, reports say
While Facebook confirmed Tuesday evening reports about a larger IPO with Wednesday’s filings, Apple has yet to confirm the other “bigger” story of the day — a bigger screen on the new iPhone.
Notoriously tight-lipped, especially when it comes to upcoming gadgets, the Cupertino tech company is unlikely to dignify Wednesday’s reports with a real response, but The Wall Street Journal and Reuters independently reported that Apple is ordering screens for the next iPhone that are roughly 30 percent larger in area.
The two news sources, relying on anonymous sources, said that Apple has been ordering screens that measure 4 inches diagonally for the next generation of its popular smartphone; the previous five iterations of the iPhone have had screens that measured 3.5 inches diagonally.
The reports make sense, as Apple is battling the new champion of cellphone companies, Samsung, which offers smartphone screens even larger than the new reported iPhone size. However, one analyst is dubious of the report.
“We’ve seen this rumor before … and before … and before,” Avi Greengart, research director for consumer devices at Current Analysis, told Mercury News staff writer Patrick may. “And it hasn’t panned out yet. sure, it’s a logical rumor from the perspective that the iPhone has a significantly smaller display than other flagship smartphones on the market today. but it also has an extremely high resolution, and that smaller design makes the device fit better in your hand.
“Besides,” Greengart added, “the last time I checked the iPhone was selling very well.”
Google taps extensive database for new search results
Google is also doing pretty well, continuing to dominate search. the Mountain View tech giant isn’t leaving its core business alone, however, announcing Wednesday a new feature in its search results.
Google announced it would begin offering tangentially related search results in a box to the right of the main links it currently offers. the information, which will come from the “Knowledge Graph,” Google’s name for a database of 500 million commonly searched topics, will offer more graphical representation and instant information on the search subject and related topics.
“Over the years, as search has improved, people expect more,” Amit Singhal, vice president of engineering at Google and the head of search, told Reuters. “We see this as the next big improvement in search relevance.”
The move continues a trend of search engines offering more than just a standard list of links for each query. For instance, Microsoft announced a major change to Bing that will offer searchers three distinct columns of results for every search, including social results from Twitter, Facebook and other networks.
Silicon Valley tech stocks
Up: Yelp, Google, LinkedIn, Jive, Cisco (CSCO), Electronic Arts
Down: Netflix (NFLX), Zynga, Advanced Micro Devices, Juniper, VMware, Symantec, Splunk, Nvidia, Hewlett-Packard (HPQ), NetApp, Intel (INTC), Apple, Oracle
The tech-heavy Nasdaq composite index: Down 19.72, or 0.68 percent, to 2,874.04
The blue chip Dow Jones industrial average: Down 33.45, or 0.26 percent, to 12,598.55
And the widely watched Standard & Poor’s 500 index: Down 5.86, or 0.44 percent, to 1,324.80
Check in weekday afternoons for the 60-Second Business break, a summary of news from Mercury News staff writers, the Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.
Biz Break: Facebook’s IPO, Apple’s iPhone and Google’s search results all may get bigger, but are they better?