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.

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.

Facebook to file motion, discuss Nasdaq role in IPO: report

NEW YORK, Fri Jun 15, 2012 – Facebook is set to file a motion to consolidate all the shareholder lawsuits against the social network site, and is expected to place some blame on the Nasdaq for its botched IPO when it files the motion, The New York Times reported Thursday.

The document, which could be filed in the District Court for the Southern District of New York as early as Friday, will provide some perspective on Nasdaq’s role on listing day and the effect the exchange’s action had on the stock’s trading activity, the paper said, citing a person with knowledge of the matter.

The lead underwriters for the initial public offering, Morgan Stanley, Goldman Sachs and JPMorgan Chase, are also expected to join the motion, the paper reported.

Nasdaq has been widely criticized for poor communication during and after the Facebook IPO, the most highly anticipated market debut in recent memory, and for failing to apologize for the technical problems in the first hours of trading of Facebook shares.

Officials at Facebook and Nasdaq could not be reached for comment outside usual business hours.

Facebook consultant argues that website’s ads work

SAN FRANCISCO, Tue Jun 12, 2012 – Marketing on Facebook influences consumer behavior and leads to increased purchases for the brands that leverage the social-networking site, consulting company comScore said in a report released Tuesday.

“The Power of Like 2: How Social Media Works,” looks at paid advertising on Facebook as well as earned media exposure– meaning mentions of the brand made by Facebook users in status updates and the like. It is based on the experiences of large brands such as Best Buy, Starbucks and Target.

The report follows up on a July 2011 paper, “The Power of Like: How Brands Reach and Influence Fans Through Social Media Marketing.”

It swipes back at recent research questioning the effectiveness of Facebook messages. A Reuters/Ipsos poll published last week showed four out of five Facebook users haven’t bought a product or service as a result of advertising or comments on Facebook.

Most brand exposures on Facebook occur through users’ news feeds, comScore said, rather than visits to dedicated brand pages on Facebook.

Fans – consumers who click a button that they like a certain brand or product – tend to outspend others for that particular brand, comScore said, citing examples such as Amazon, Best Buy, and Target. Purchase data comes via information from loyalty clubs, credit card companies, and third-party collectors, with the permission of the study participant.

In the case of Target, Facebook and comScore studied two groups. One group, made up of fans of Target and their friends, saw “earned” messages about Target – updates about Target that run in news feeds and the like.

The second group was made up of Facebook users who weren’t fans of Target and saw no messages. Both groups had identical purchase behavior at Target prior to the study.

Facebook on preliminary list to join Russell 3000 index

NEW YORK, Mon Jun 11, 2012 – Facebook Inc. is on the preliminary list to join the Russell 3000 index, according to Russell Investments on Monday.

Facebook will be the largest addition to the index in market capitalization. The social network giant made a market debut in May. Among other IPO additions to the Russell 3000 are software maker Splunk Inc. and financial services provider EverBank Financial Corp.

Apple, with market capitalization of $540.2 billion, is expected to replace ExxonMobil with $367.7 billion market cap, as the largest company in the Russell 3000, Russell Investments said. Apple grew its market capitalization by 68 percent in the last year.

The combined capitalization of stocks in the Russell 3000, which reflects about 98 percent of the investable U.S. equity universe, will decrease from $16.7 trillion at May 31, 2011 to $15.8 trillion as of May 31, 2012. Similarly, the median market capitalization will decrease from $1.04 billion to $910 million.

“Russell’s index reconstitution reflects the market decline over the past year. That said, returns have been far from uniform,” said Steve Wood, chief market strategist for North America at Russell Investments.

“Even as the flare-up in the euro zone crisis, China’s slowdown and relatively soft U.S. economic data have weighed on investor sentiment in recent weeks, the global markets showed resilience when viewed over the course of a year. Furthermore, Russell Indexes reflected diverse returns and decreased correlations across global markets in the last year, reinforcing the importance of a well-diversified global multi-asset portfolio approach.”

Adrienne Lenhoff: Quality should beat quantity on Facebook

Adrienne Lenhoff

Adrienne Lenhoff, president and CEO, Shazaaam PR and Marketing Communications

Let’s face it: We all want to be liked. But when it comes to being liked in the social media space — specifically Facebook — many companies make the mistake of measuring the quantity of the “likes” they receive as opposed to the quality.

The reality is that the quality of the likes is often much more important and relevant than the quantity of likes. That fact was driven home to me by the case of one of our clients.

Recently, the client told us that it want to gather more than 1 million likes on its Facebook page. The client’s page receives a steady viral increase of 500 to 700 weekly new likes, and the likes are “quality” likes with relevance to its company. They are coming from individuals who have a special interest in the company, who want to participate in conversations and are actively sharing our client’s posts on their personal Facebook pages and within their social contact spheres.

Looking at the analytics of the individuals who like our client’s page, we’re finding that in addition to being highly activated and engaged, they are also target-market and geographically relevant. The likes are happening because customers are actively sharing the content, pushing new people to discover the page, engaging in relevant discussions and are coming from people specifically seeking the company online in order to socially connect.

Thus far there have been no ad buys and there have been no contests launched to also supplement growth efforts. Their collection of likes — now in excess of 50,000 — has come through social networking efforts.

But internally, our client is facing the same struggle that thousands of companies currently face when it comes to evaluating their social media ROI. Managers within their organization feel that in order to justify the relevance of social media in their marketing mix, they have to obtain as many likes as possible. But getting people to simply click the “like” icon on a Facebook page is not difficult.

There are many ways to quickly inflate page likes. Contests spike likes but most of the entrants are only interested in winning the prize and not in making a purchase. You can buy packages of page likes but the majority of “purchased” likes are typically not buyers and are not geographically relevant.

Facebook ad campaigns, which are similar to Google pay-per-click advertising, can also help drive new likes. Facebook ads allow an advertiser to drill down to target potential brand loyalists and customers by a variety of geographic and psychographic denominators.

The issue is that once you stop the contest or the advertising campaign, your number of new likes will drop off considerably. You potentially will see an exponential increase in likes during the campaign period.

But what good are these new likes if people liking you possibly only visit your page once? If they initially like you and then never come back, they aren’t paying attention to what you’re saying, they’re not engaging with you and they have no interest in buying your product or service — or telling others to buy your product or service.

The relevancy in social media is to have people talking about you and with you, and ultimately becoming your brand evangelists. Statistics have shown that 90 percent of consumers trust peer recommendations and 70 percent of consumers trust recommendations online.

Companies need to turn their attention away from trying to use likes as a popularity contest. As a company leader, you need to realize that if you have a Facebook community of 1,000 consumers who are actively engaged, with analytics showing huge impression rates, it is much more valuable than a community of 10,000 who visit your page, click “like” one time, then seldom — or never — come back.

Adrienne Lenhoff is president and CEO of Buzzphoria Social Media, Shazaaam PR and Marketing Communications, and Promo Marketing Team, which conducts product sampling, mobile tours and events. She can be reached at [email protected]

Facebook market makers’ losses total at least $100 million

NEW YORK, Fri May 25, 2012 – Claims by four of Wall Street’s main market makers against Nasdaq over Facebook’s botched IPO are likely to exceed $100 million, as they and other traders continue to deal with thousands of problems with customer orders.

A technical glitch delayed the social networking company’s market debut by 30 minutes on Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped. The exchange operator is facing lawsuits from investors and threats of legal action from brokers.

Four of the top market makers in the Facebook IPO – Knight Capital, Citadel Securities, UBS AG and Citi’s Automated Trading Desk – collectively have probably lost more than $100 million from problems arising from the deal, said a senior executive at one of the firms.

Knight and Citadel are each claiming losses of $30 million to $35 million, potentially overwhelming a $13 million fund the exchange set up to deal with potential claims.

Nasdaq also has to contend with the outside prospect that it could lose the Facebook listing entirely after having just obtained it.