As Facebook grows up, grand ambitions get reality check

SAN FRANCISCO, Wed Jun 5, 2013 — Facebook, which once seemed poised to take over the Internet, is showing its limitations: a host of newer services are gaining ground among trend-setting youth; a much-hyped smartphone app has received a tepid response; and grand ambitions such as taking on Google in the search business seem ever more fanciful.

In a volatile Internet industry where companies can rise and fall almost overnight, one might even say that the nine-year-old Facebook Inc. is suffering a mid-life crisis.

Yet even if the social network falls short of its goal of becoming an all-encompassing Web destination that consumers turn to for everything from messaging to shopping, experts say Facebook has likely achieved enough scale and ubiquity to assure its staying power.

“They’ve gotten so big that it’s one of those things you have to use,” said Dan Niles, chief investment officer of tech-focused hedge fund firm AlphaOne Capital Partners, which does not have a Facebook position. “You may not like the electricity company but I guarantee you you’re still getting electricity.”

Concerns that Facebook is losing its grip on consumers, underscored by a recent report from Pew Research that showed declining enthusiasm among some teens, have kept a lid on the company’s share price even as stock markets rallied. Facebook shares closed at $23.52 on Tuesday, near their six-month low and almost 40 percent below the company’s May 2012 IPO price.

Facebook in talks to buy Israel’s Waze for up to $1 billion: report

MENLO PARK, Calif., Fri May 10, 2013 — Facebook Inc. is in advanced talks to acquire Israeli mobile satellite navigation start-up Waze for $800 million to $1 billion, business daily Calcalist reported.

The deal, which would be Facebook’s largest acquisition, would give the social networking company a mapping service and allow it to better compete with Google Inc. and Apple Inc.
Maps and navigation services have become a key asset for technology companies as consumers increasingly adopt smartphones and other mobile devices.
Waze uses satellite signals from members’ smartphones to generate maps and traffic data, which it then shares with other users, offering real-time traffic info.
Due diligence between Waze and Facebook is underway after a term sheet was signed, Calcalist said, adding that talks began six months ago.
Officials at Waze and Facebook declined to comment on the report.
Facebook’s largest deal to date is the September acquisition of photo-sharing app, Instagram. Facebook agreed to buy the company for $1 billion in cash and stock, though the actual price it paid was $715 million due to declines in Facebook’s share price.
The four-year-old Waze, which has 47 million users, has raised $67 million in funding to date from firms including Kleiner Perkins Caufield & Byers, Blue Run Ventures and semiconductor company Qualcomm Inc.

Facebook slumps as mobile ad growth fails to impress

PALO ALTO, Calif., Thu Jan 31, 2013 — Shares of Facebook Inc. were set to open 7 percent lower on Thursday as a surge in fourth-quarter mobile advertising revenue failed to live up to Wall Street’s high expectations.

Three brokerages downgraded the stock of the No. 1 social network, which has struggled to develop a full-fledged mobile advertising business.

Facebook has long established itself as one of the most important websites, but investors have worried that until the company’s mobile advertising strategy takes off, revenue growth will remain shaky.

The company reported a better-than-expected fourth-quarter profit on Wednesday and said its mobile advertising revenue doubled to $306 million, suggesting it was making inroads into handheld devices such as smartphones and tablets.

Investors were looking for at least $350 million in mobile advertising revenue, Piper Jaffray analyst Gene Munster said in a note to clients.

“While the trajectory of mobile growth may not be as steep as some investors were hoping, the theme of mobile as the future of Facebook remains intact,” he said.

GM in talks with Facebook about return to paid ads

DETROIT, Wed Jan 16, 2013 — General Motors Co. and Facebook Inc. are discussing the return of the U.S. automaker as a paid advertiser about eight months after GM said it would stop running ads on the social networking website, a top GM executive said.

Alan Batey, GM’s interim marketing chief, said at the Detroit auto show that discussions with Facebook officials were ongoing though the Detroit company had nothing to announce about a return to Facebook as a paid advertiser.

“We’re still actively talking to them and looking at opportunities that come our way,” Batey told Reuters on Tuesday. “I wouldn’t tell you that there’s a Mexican standoff here. We just didn’t see the value” in the ads.

Three days before Facebook’s May 2012 IPO, GM said it was dropping paid ads on the website because they had little impact on consumers.

GM has previously said it spent about $40 million on its Facebook presence, but only $10 million of that was paid to Facebook for advertising. The rest covers the creation of content and the advertising and media agencies involved.

Sources said last summer that the two companies were discussing GM’s return and Facebook offered to provide GM with data showing the effectiveness of the website’s paid ads. However, Facebook at that time did not offer any concessions.

Batey declined to discuss the current talks or to provide a possible timing for GM’s return to Facebook, where it still has pages for which it pays no fees to market its car and trucks.

“I wouldn’t want to predict if there’s something, but I also wouldn’t be surprised if there were some things,” he said.

Also last May, GM said it would not advertise on CBS during the 2013 Super Bowl because the ad spots were overpriced. Batey said that decision remained in place.

Separately, Batey said he had nothing to announce on GM hiring a permanent chief marketing officer. GM’s former marketing chief Joel Ewanick was fired last August for not properly disclosing the full cost of a $559 million sponsorship deal with English soccer club Manchester United.

Facebook offering e-retailers sales tracking tool

SAN FRANCISCO, Fri Nov 16, 2012 – Facebook Inc. wants more credit for making online cash registers ring.

Facebook will begin rolling out on Friday a new tool which will allow online retailers to track purchases by members of the social network who have viewed their ads.

The tool is the latest of the new advertising features Facebook is offering to convince marketers that steering advertising dollars to the company will deliver a payoff.

Facebook, with roughly 1 billion users, has faced a tough reception on Wall Street amid concerns about its slowing revenue growth.

“Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers,” said David Baser, a product manager for Facebook’s ads business who said the “conversion measurement” tool has been a top customer request for a long time.

The sales information that advertisers receive is anonymous, said Baser. “You would see the number of people who bought shoes,” he said, using the example of an online shoe retailer. But marketers would not be able to get information that could identify the people, he added.

Knight accepts Nasdaq’s $62-million Facebook payback plan

NEW YORK, Thu Aug 30, 2012 – After initially criticizing Nasdaq OMX Group for its response to Facebook’s botched initial public offering, trading firm Knight Capital Group Inc said it accepted the exchange’s latest plan to pay back brokers a portion of their losses.

Knight’s support comes after Nasdaq increased the payback fund to $62 million in cash from an earlier $40 million made up mostly of trading rebates, the market-making firm said in a letter to the U.S. Securities and Exchange Commission, dated Aug. 29.

Knight, which facilitates trades for other firms, had called Nasdaq’s earlier plan “inadequate,” and said it was considering legal action over the May 18 IPO.

“Although we would have preferred that the accommodation pool cover all losses sustained by Nasdaq members, we do support Nasdaq’s proposal to increase the accommodation pool from $40 million to $62 million,” Knight said in the letter obtained by Reuters.

Knight and other retail market-making firms and brokers together lost more than $500 million in the IPO.

Some firms, like UBS AG, which disclosed it lost more than $350 million, and Citigroup’s Automated Trading Desk, which is said to have lost up to $35 million, have rejected the plan, saying Nasdaq should be responsible for all of the losses, because it acted in a for-profit manner in the IPO.

Facebook shares drop 4 percent, hit another low

SAN FRANCISCO, Fri Aug 17, 2012 – Facebook Inc. shares sank as much 4.3 percent on Friday to set a new low, a day after early investors got the green light to sell for the first time.

More than 270 million shares owned by the early investors became available for trade on Thursday after a 3-month curb on sales ended. That’s more than one-half the 421 million shares sold in its initial public offering on May 18.

Facebook hit a low of $19.01 Friday morning and were down almost exactly 50 percent from the $38 offering price at its May IPO. At midday, the stock had eased to $19.15, off 3.5 percent.

Nearly 62 million shares of Facebook traded hands in the first two hours of trading on Friday.

More than 1.4 billion additional shares held by early investors and Facebook employees are set to become available for trading by year’s end, adding further pressure on shares of the once high-flyer.

Facebook, the world’s No. 1 Internet social network founded by Mark Zuckerberg in his Harvard University dorm room, became the only U.S. company to debut with a market value of more than $100 billion.

But investors have grown disillusioned with Facebook’s inability to articulate a plan to reverse slowing revenue growth.

Nasdaq to unveil Facebook compensation plan next week: report

NEW YORK, Fri Jul 20, 2012 – Nasdaq OMX Group Inc. plans next week to release its compensation plan for firms that lost money in the bungled Facebook initial public offering, the FOX Business channel reported on Friday.
The deal being discussed will be all cash, and likely more than the $40 million originally proposed, though nothing had been finalized, the report said, citing sources.
Nasdaq is working with the U.S. Securities and Exchange Commission on a second draft of the proposal, according to the report.
One source told the network the new proposal could be as high $100 million, all cash.
Nasdaq had proposed a $40 million pool, made up of $13.7 million in cash, with the rest in trading credits. The plan drew criticism from market makers who lost an estimated $200 million on the IPO, and by other exchanges, which said the trading credits would force the firms to trade on Nasdaq.
Nasdaq declined to comment on the report.

SEC may order Nasdaq to upgrade trading systems: WSJ

NEW YORK, Fri Jun 29, 2012 – U.S. securities regulators may force Nasdaq OMX Group Inc. to upgrade its trading systems following last month’s glitch-ridden IPO of Facebook Inc., the Wall Street Journal reported.

The Securities and Exchange Commission is looking into what caused the glitches that left the market makers – who facilitate trades for brokers – in the dark for hours as to which trades had gone through.

As part of the deepening investigation, regulators are weighing whether to demand Nasdaq to revamp its processes for developing, changing, testing and implementing the computer code used in initial public offerings and other exchange functions, the newspaper said, citing people familiar with the matter.

The SEC hasn’t decided yet whether to take any enforcement action against Nasdaq, the paper said.

The news comes more than six weeks after Facebook’s $16 billion initial public offering on May 18, where technology glitches and a communication breakdown marred the trading of the stock.

The exchange’s executives are also reviewing its management structure, focusing on the operations and technology areas overseen by Anna Ewing, the Journal said, citing people familiar with discussions inside Nasdaq.

Ewing could not be reached for comment outside regular U.S. business hours.

Nasdaq’s board first discussed potential ways to restructure its operations and technology unit, including possibly replacing Ewing as the supervisor over both areas, more than four weeks ago, the newspaper said, citing one person with direct knowledge of the discussions.

Neither the SEC nor the Nasdaq could be immediately reached for comment.

Morgan Stanley faces Facebook fallout, limits damage

NEW YORK, Wed Jun 27, 2012 – Morgan Stanley was quick to dismiss suggestions its status as the king of initial public offerings for Silicon Valley was under threat because of the botched Facebook Inc. IPO last month. And that confidence may be warranted.

While Morgan Stanley has been snubbed by some technology companies, the repercussions for the Wall Street investment bank have been limited, according to sources familiar with the situation.

Just a week after the Facebook debut, Ruckus Wireless chose Goldman Sachs Group Inc. over Morgan Stanley as the lead underwriter for its IPO, sources familiar with the matter said.

One of the sources said the company’s decision had nothing to do with the social networking website’s debacle, but a second said Facebook had at least some influence on the decision.

Ruckus, which supplies WiFi products to mobile operators, chose Goldman primarily because it liked the firm’s banker and the pitch, the sources said. Morgan Stanley is now one of the bookrunners on the IPO.

Some companies and rivals have railed against Morgan Stanley’s tendency to monopolize IPOs – a practice that is not uncommon on Wall Street. The bank retained tight control over information, decisions and the allocation of Facebook shares, even though there were 33 bookrunners on the offering, other underwriters have said.

In fact, the bank has long argued it is right to do so, telling clients it offers them “one throat to choke” if something goes wrong, sources familiar with the situation said.

But at least one client, Palo Alto Networks, which has hired Morgan Stanley as its lead bookrunner, is no longer buying into that argument. The security software maker has asked its other underwriters, which include Goldman and Citigroup Inc., to be more active in its IPO, which is planned for later this summer, sources familiar with the company said. That will likely mean having more of a voice in book-building, as well as pricing discussions.