Monday Grok: Cracks appear in Facebook's IPO

Monday Grok: Cracks appear in Facebook's IPO

Investors may raid Apple's cash stash, MWC kicks off

The first serious holes in Facebook's otherwise relentless march towards a $100 billion IPO appeared over the weekend with credible reports that claim the company will miss its Q1 revenue forecasts. If you are going to miss a forecast then the quarter before you float is probably not the best place to start. Doubts are also starting to emerge about the resilience of its growth over the next two years.

According to a report in ReadWriteWeb, “On Thursday, PrivCo CEO Sam Hamadeh told VentureBeat that several people close to the company were saying Facebook was going to miss first-quarter revenue projections. Meanwhile, eMarketer released a report predicting Facebook's advertising revenue growth will slow in 2013 and 2014. That follows reports earlier this week about retailers shutting down Facebook stores.”

The great imponderable in all this is mobility. How soon will the Book, and all other publishers, be able to monetise the fastest growing new digital channel? Everyone is assuming it will be quick. But it’s been 15 years since print media websites emerged and they are still generating only a fraction of their revenue from digital channels, relative to their traditional base.

Facebook also gets pinged for relying too much on advertising revenue, with the eMarketing report noting that it currently relies on ads for 85 per cent of its revenue.

Time to slash the cash stash?

Apple CEO Tim Cook might return some of the company’s huge cash hoard to shareholders, according to a report in “During a question-and-answer session today at the company’s annual shareholders’ meeting, Cook indicated he and the rest of Apple’s board are nearing a decision,” according to the story. The article pointed out that such a strategy would have been at odds with the approach of previous CEO Steve Jobs, who passed away last year.

Interestingly, at the time of Jobs' death a number of writers suggested such a course of action might materialise, and that it might represent a poor turning point for Apple — a moment when innovation starts to slow as the vultures and blood suckers start getting their way. Not that there's anything wrong with vultures and bloodsuckers, btw.

As we wrote at the time, “Perhaps those shareholders may start wanting some of that huge reserve back in their own bank accounts, rather than Apple’s. After all, who’s to say Apple is any better at investing the cash than they themselves. And that’s the point — it is their money, after all.”

Mobile Congress gets underway

The blogosphere is ramping up in anticipation of the Mobile World Congress which began yesterday in Barcelona, Spain.

LG, unusually is generating a fair bit of buzz in a world that usually can't see beyond the latest output from HTC or Samsung (Apple presumably doesn't approve of an event it doesn't control). <i>Techcrunch</i> noted that prior to the conference, analytics company found that “LG in the last week has blown away competition from rival handset makers, and even Google’s Android, to become the most talked-about brand in the last week in all Twitter conversations related to MWC.”

This <i>Gigaom</i> article has a fair stab at what to expect and like Techcrunch, it notes that everyone is going large on LG this year.

Andrew Birmingham is the CEO of Silicon Gully Investments

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