WHEN: MONDAY, JUNE 13, 2011
WHERE: "THE STRATEGY SESSION" AT 12PM ET
Following is the unofficial transcript of breaking news from CNBC's Kate Kelly. All references must be sourced to CNBC.
For more information, visit: http://www.cnbc.com/id/43378490
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DAVID FABER: KATE KELLY IS HERE WITH SOME BREAKING DEVELOPMENTS INVOLVING A NAME EVERYONE IS WATCHING KATE
KATE KELLY: THANKS, DAVID. YEAH I JUST GOT BACK FROM A FEW DAYS IN SILICON VALLEY WHERE OF COURSE THIS IS THE IPO THAT EVERYBODY WANTS TO TALK ABOUT. I MEAN THERE IS DEFINITELY SOME CHATTER ABOUT ZINGA AND CERTAINLY THE POST MORTEMS ON LINKED IN AND SO ON BUT FACEBOOK IS THE NAME TO DISCUSS AND OF COURSE THE REASON IS VALUATION AND THE FACT THAT THE TIMING IS ALMOST SORT OF MARKET INSENSITIVE ESSENTIALLY THIS IS A COMPANY THAT COULD PROBABLY DO WELL IN ALMOST ANY MARKET CONDITION SO ITS NOT ONE THAT NEEDS TO LOOK FOR THE SO CALLED IPO WINDOW WHICH WE APPEAR TO BE IN RIGHT NOW IN TERMS OF VALUATION SOME OF THE PRIVATE MARKETS THAT TRACK FACEBOOK SHARES HAVE AN IMPLIED RECENT VALUATION OF ABOUT 85 BILLION DOLLARS NOW UP TO YOU WHETHER YOU PUT A LOT OF STOCK IN THAT THESE ARE FAIRLY THINLY TRADED MARKETS AND LETS REMEMBER THAT AS RECENTLY AS JANUARY WHEN GOLDMAN SACHS MADE A WELL PUBLICIZED PRIVATE INVESTMENT IN FACEBOOK IT WAS VALUED AT 50 BILLION BUT PEOPLE WHO ARE ON WALL STREET AND TEND TO TRACK IN THIS INFORMATION TELL ME THEY THINK THE IPO IF AND WHEN IT HAPPENS COULD VALUE THE COMPANY AT NORTH OF A SHOCKING 100 BILLION DOLLARS AND WHEN WOULD THIS BE WELL APPARENTLY IT COULD HAPPEN IN THE FIRST QUARTER OF 2012 WE COULD SEE AN S1 AS EARLY AS OCTOBER OR NOVEMBER OF THIS YEAR HERES THE REASON FACEBOOK IS VERY LIKELY TO HAVE MORE THAN 500 PRIVATE SHAREHOLDERS BY THE END OF THIS CALENDAR YEAR NOW ASSUMING THEY ARE ON A FISCAL CALENDAR YEAR THEY WILL NEED TO COUNT THEIR NUMBER OF SHAREHOLDERS ON DECEMBER 31ST AND IF INDEED IT IS MORE THAN 500 THAT WILL TRIGGER REPORTING REQUIREMENTS WITH THE SEC KNOWN AS THE 500 RULE FOR SHORT THEY HAVE UNTIL THE END OF APRIL TO DISCLOSE THEIR FINANCIALS BUT THEY MAY JUST WANT TO GET AHEAD OF THAT BY DOING A FORMAL INITIAL PUBLIC OFFERING IM TOLD AND THAT COULD HAPPEN IN THE FIRST QUARTER OF THE YEAR SO WEVE GOT A MASSIVE VALUATION AND A DEAL THAT COULD BE COMING WITHIN THE NEXT 9 MONTHS OR SO ONE OTHER FACTOR TO KEEP IN MIND IS EMPLOYEE INCENTIVIZATION THE ISSUE HERE IS THAT EMPLOYEES OF FACEBOOK SINCE LAST SPRING HAVE NOT BEEN PERMITTED TO SELL THEIR SHARES TO OTHER INVESTORS EXCEPT PERHAPS IN SOME LIMITED CIRCUMSTANCES BUT ITS BECOME VERY DIFFICULT FOR THEM TO DO THAT SO THERES ALMOST A PERVERSE INCENTIVE IM TOLD FOR PEOPLE TO LEAVE FACEBOOK SO THEY CAN CASH OUT THEIR EQUITY NOW THERE MAYBE SOME EXCEPTIONS TO THAT THE COMPANY HAS THE RIGHT TO BUY SHARES BACK FOR EXAMPLE IF YOU WANT TO DO A TRANSACTION THEY HAVE THE RIGHT OF FIRST REFUSAL SO THERE MAY BE SOME OPPORTUNITIES BUT REALLY AN IPO WOULD MAKE IT A LOT EASIER FOR EMPLOYEES TO MONETIZE THEIR SHARES.
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