Facebook goes public

The long-awaited initial public offering has made Facebook founder and CEO Mark Zuckerberg one of the three richest Americans in stock value in just eight years.

Zuckerberg created Facebook with his roommate as a Harvard University student in 2004, and had to break up with his girlfriend because of privacy issues on the website.

Facebook said Wednesday that it submitted an IPO application to the Securities Exchange Commission, and plans to raise up to 5 billion U.S. dollars, more than double the amount of Google, which raked in 1.9 billion dollars through an IPO in 2004. The Internet industry is excited over the largest IPO in history and expects Facebook`s market capitalization could hit 100 billion dollars if its stock is traded from as early as May.

If the site`s value reaches 100 billion dollars, Zuckerberg’s stock value will be worth 28.4 billion dollars since he owns a 28.4-percent stake. This would make him the third richest IT mogul following Microsoft’s Bill Gates and Oracle’s Larry Ellison.

Facebook co-founders Dustin Moskovitz (7.6 percent) and Eduardo Saverin (5 percent) and investor Jim Breyer (11.4 percent) will join the ranks of billionaires. U2 singer Bono owns 1.5 percent. Facebook employees with stock options will become rich as well. A third of the site`s 3,000 employees are likely to be millionaires.

The IPO application included Zuckerberg’s annual salary. Last year, he earned 1.48 million dollars including 483,333 dollars in salary, 220,500 dollars in a first-half bonus, and 783,529 dollars in other bonuses. The application form says his base salary will be 1 dollar from next year. It also said Facebook had net income of 1 billion dollars last year and 845 million active users, or 1.26 percent of the global population of 7 billion.

Facebook`s IPO is the largest in the U.S. IT industry and fourth largest in American corporate history. Visa Card had the largest U.S. IPO of 19 billion dollars in 2008 followed by those by General Motors and AT&T Wireless.

The Wall Street Journal and The New York Times said Facebook hoped for 5 billion dollars in the application but can gather up to 100 billion dollars through this IPO. Former Treasury Secretary and MIT professor Lawrence Summers said, “It’s a major milestone in U.S. history.”

The global IT industry sees that if Microsoft represented the first IT generation and Google and Apple the second, Facebook will be the third.

Some are fearful of another IT crash like the one in the early 2000s. Facebook’s major profit model is online ads, and the site is growing fast in the ad market. Critics are skeptical over this growth, however, questioning the growth momentum in the limited online ad market.

kej09@donga.com witness@donga.com