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Facebook IPO: a blessing mixed with curse

(Xinhua)

13:15, February 02, 2012

SAN FRANCISCO, Feb. 1 (Xinhua) -- Facebook on Wednesday filed to raise 5 billion U.S. dollars in an initial public offering (IPO), one of the largest so far in the technology sector.

The world's largest social network chose its eighth birthday for the filing which sets the stage for its debut show in May. It could be the most anticipated financial event in Silicon Valley in recent years.

However, industry watchers are discussing whether the IPO is a blessing or a curse to the web giant.

MILESTONE WITH TREADSTONE

According to its filing with the U.S. Securities and Exchange Commission, Facebook now has 845 million users and 483 million daily users.

It had 3.7 billion U.S. dollars revenue in 2011, 1.8 billion dollars operating income and 1 billion dollars net income.

Lawrence Summers, former U.S. Treasury Secretary and a mentor to Facebook chief operating officer Sheryl Sandberg, told The New York Times that the IPO is "an American milestone," saying Facebook opens up new capabilities and permits whole new connections like auto giant Ford in its day.

For individuals, the Facebook IPO represents an opportunity for its initial investors and many of its employees to cash out, creating a brand new generation of millionaires and billionaires in Silicon Valley.

From car dealers to luxury watch sellers, from real estate agents to financial advisers, merchants have been waiting for Facebook after the stock offering of social networking companies like LinkedIn and Zynga brought them good business like the days of internet boom.

However, whether Facebook could continue to ensure investors by leveraging personal information, the major engine of its business, and ease privacy concerns from users and regulators are not clear, observers said.

So far, some advertisers are still not convinced enough to pay for advertising, worrying Facebook users may not be interested in traditional advertising.

A report from Facebook marketing firm TBG Digital last month showed the company's advertising business remained on an upswing in the fourth quarter last year, but metrics of user engagement like click-through rate are still relatively low.

Meanwhile, Facebook depends heavily on advertising for social games such as Zynga's, raising concerns it may lose large portion of revenue if companies like Zynga seeks to stand on its own feet.

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