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Facebook Seeks To Raise $10 Billion In IPO

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PALO ALTO (CBS/AP) – Facebook might finally be laying down the groundwork for a highly-anticipated initial public offering, long expected to take place sometime after April 2012.

The Wall Street Journal is reporting that the world’s largest online social network is looking into raising as much as $10 billion in its IPO. The Journal cited people familiar with the matter but did not identify them by name.

The amount would value Palo Alto-based Facebook at as much as $100 billion, according to the report. That’s more than four times the market capitalization that Google Inc. had at the time of its 2004 IPO.

KCBS’ Matt Bigler Reports:

“Off the top of my head it sounds a little pricey to me,” said Larry Dignan editor in chief at ZDNet. That would value it more than Disney and Amazon, Dignan added.

Dignan said he thinks that Facebook’s U.S. growth has peaked at about 800 million users and that they’re facing competition from Google and its Google+ social network, although he doesn’t see Google+ as a real threat.

“A lot of the techies have gravitated towards Google Plus, but I’m not seeing the average bear. My neighbor’s not on Google Plus, my family’s not. All those people are on Facebook,” Dignan said.

Federal rules require companies with at least $10 million in assets and more than 500 shareholders to disclose its quarterly financial results and other details. The reporting requirement kicks in 120 days after the fiscal year in which a company exceeds the shareholder threshold for the first time.

Facebook’s fiscal year ends Dec. 31, so it would have until late April 2012 to comply with this requirement, having hit the threshold this year.

Also Tuesday, Facebook said it is settling with the Federal Trade Commission over charges it deceived consumers.

The FTC had charged that the social network told people they could keep the information they share private, then allowed it to be made public.

Founded in a Harvard dorm room in February 2004, Facebook has tried to hold off on an IPO to focus on building its product rather than pleasing investors. But the reporting rules, along with early employees and investors eager to cash in on their stock, are putting it in a bind.

A slew of smaller Internet and social media companies have been trickling on to the public stock market this year. Professional online network LinkedIn Corp. was the first to test the waters in May. Since then, the online deals site Groupon Inc., the Internet radio station Pandora Media Inc. and others have gone public. Others, including the reviews site Yelp Inc. and the online game company Zynga Inc., are planning to do so.

Though hotly anticipated, the latest crop of Internet IPOs has not gone smoothly. Groupon’s stock is now trading below its IPO price. It closed at $15.24 on Monday, down 23.8 percent from its $20 IPO price. Pandora has also fallen below its IPO price, though LinkedIn, among the few that’s been profitable, is still well above it.

An email seeking comment from Facebook was not immediately returned Tuesday morning. Facebook has declined to comment on IPO speculation in the past.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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