Birthday boy Zuckerberg touts mobile strategy as IPO nears
New York • Mark Zuckerberg celebrated turning 28 Monday on the final leg of a roadshow aimed at building demand for Facebook's initial public offering and convincing investors that he can make money from mobile users.
CEO Zuckerberg, along with Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman, will meet potential shareholders in a cross- country tour that includes stops in Chicago and Denver in coming days. Facebook engineers, meantime, are putting final touches on products designed to help profit from the 488 million people who access the world's biggest social network on the go.
Facebook said last week that growth in advertising sales isn't keeping pace with gains in users, many of them logging on from handheld devices, while some institutional investors reportedly have balked at buying Facebook stock. That adds to pressure on company executives to articulate their mobile strategy ahead of the IPO, due this week, said Jay Ritter, a professor at the University of Florida.
"In terms of Facebook's valuation, the big issue is whether they're going to be able to grow to have sustainable profits," said Ritter, who teaches finance in Gainesville. "The biggest issue in that regard is the mix of desktop users versus people using their mobile device."
Facebook plans to raise as much as $11.8 billion through the IPO, the biggest ever for an Internet company. Its shares are set to price Thursday and begin trading under the symbol FB on the Nasdaq Stock Market the following day. Facebook is offering 337.4 million shares at $28 to $35 apiece, and it's seeking a valuation of as high as $96 billion, filings show. Some potential investors, however, have expressed concern about the company's growth prospects.
The company reportedly plans to stop taking orders for the IPO after U.S. markets close Tuesday, two days ahead of schedule.
Zuckerberg, at a meeting last week in Palo Alto, Calif., reportedly fielded questions about the company's mobile strategy. Executives will probably get more inquiries on the matter at meetings in the coming days.
Ads shown on mobile devices are smaller, harder to decipher and can be less likely to prompt users to make a purchase. That means they may be less appealing to advertisers and less lucrative than marketing messages on bigger computers.
"Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results," Facebook says in its IPO filings.
As part of its effort to wring sales from mobile users, Facebook unveiled an online store last week to help it play catch-up with Apple and Google in the area of applications that can be downloaded onto handheld devices.
Facebook has began taking developer submissions for its App Center, a curated online store for programs that run on the social network. Facebook would keep a cut of the revenue generated by developers who sell software in the store, helping it diversify away from traditional advertising.
"Wall Street cares about one thing, growth in profit," said Paul Deninger, a senior managing director at New York-based investment bank Evercore Partners Inc.
Apple's Wozniak say Facebook a worthy 'buy'
Apple Inc. co-founder Steve Wozniak said investors looking to make money should buy Facebook Inc. shares when the social networking site sells stock in its initial public offering. Wozniak said he would consider buying the stock regardless of its valuation this week.