Mobile strategy key to success for Facebook’s IPO

Posted: May 15, 2012 at 9:13 pm

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NEW YORK -- Mark Zuckerberg celebrated turning 28 Monday on the final leg of a roadshow aimed at building demand for Facebooks initial public offering and convincing investors that he can make money from mobile users.

Chief Executive Officer 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. Facebook engineers, meantime, are putting final touches on products designed to help profit from the 488 million people who access the worlds biggest social network on the go.

Facebook said last week that growth in advertising sales isnt keeping pace with gains in users, many of them logging on from hand-held devices, while some institutional investors have balked at buying Facebook stock, people with knowledge of the matter said. 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 Facebooks valuation, the big issue is whether theyre 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 on Thursday and begin trading under the symbol FB on the Nasdaq the following day. Facebook is offering 337.4 million shares at $28 to $35 apiece, and its seeking a valuation of as high as $96 billion, filings show.

The company plans to stop taking orders for the IPO after U.S. markets close Tuesday, two days ahead of schedule, according to a person with knowledge of the transaction.

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 a new online store last week to help it play catch-up with Apple and Google in the area of applications that can be downloaded onto hand-held 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.

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Mobile strategy key to success for Facebook’s IPO

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May 15th, 2012 at 9:13 pm

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