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Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

finance.yahoo.com

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Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#61

Post by antidoh »

sp332 wrote: post #23
guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

The "market" is usually caveat emptor - the buyer has to take into consideration how much they trust the seller. On top of that, society has some laws against fraud that make lying more harmful to the seller. That means the buyer can have some amount of faith in the seller. For publicly traded companies, this goes a lot further. The SEC is supposed to create an environment with reasonable auditing and pretty harsh pe…

I read an article a few years ago that correlated the desirability to do business in a country with the perceived likelihood of fairness and low corruption in institutions and government. The US was high (possibly first?) in that ranking.

I wonder at what point that starts to change for us?

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#62

Post by cpeterso »

lukejduncan wrote: post #50
GFischer wrote: post #45

Earlier quoted context omitted.

Another posted linked to Wikipedia http://news.ycombinator.com/item?id=4008313 "Henry Blodget (born 1966) is an American former equity research analyst, currently banned from the securities industry" en.wikipedia.org/wiki/Henry_Blodget

This gives some good color to who's running Business Insider.

Business insiders.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#63

Post by lancewiggs »

antidoh wrote: post #61
sp332 wrote: post #23

Earlier quoted context omitted.

The "market" is usually caveat emptor - the buyer has to take into consideration how much they trust the seller. On top of that, society has some laws against fraud that make lying more harmful to the seller. That means the buyer can have some amount of faith in the seller. For publicly traded companies, this goes a lot further. The SEC is supposed to create an environment with reasonable auditing and pretty harsh pe…

I read an article a few years ago that correlated the desirability to do business in a country with the perceived likelihood of fairness and low corruption in institutions and government. The US was high (possibly first?) in that ranking. I wonder at what point that starts to change for us?

That may have been something out of the World Bank, the Doing Business team. Sadly the low corruption high fairness perception times are long past - the likes of NZ and Scandinavian countries now dominate the lists. However the US is still the biggest economy, so will continue to attract huge investment. The big alternatives are not scoring highly in low corruption and fairness either.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#64

Post by thereason »

I'm loving this sequence of events just for opportunity to see the cognitive dissonance of some HN commenters in action.

The FB IPO strategy was to wait for the peak (or "plateau", if you prefer) in their growth, collect money from the public and then, for the insiders, quickly cash out.

As for why they wanted to collect money from the public through an IPO, we can call it greed, but truthfully it was also the logical thing to do for the company. They knew were not going to grow revenues any further from the Facebook "business model". Revenues would slowly decline going forward. The novelty factor would disappear and advertisers would learn. But with an IPO they could bring in many years worth of revenue, by selling worthless shares to gullible investors, and extend the life of "Facebook Corporation". As long as Facebook has cash, they can stay "in the game". Like Microsoft, they do not need to innovate, they can just acquire or copy new players as they come along. They just sit and wait for the competition to arise, then quickly snuff it out, with cash.

New ideas and innovation are what can kill a company like Facebook (or Yahoo, or Microsoft, or so many others). The way you stay in the game is by having the cash to purchase the work of the innovators who would otherwise render your business obsolete.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#65

Post by chernevik »

cube13 wrote: post #60
chernevik wrote: post #58

Earlier quoted context omitted.

Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged. To me a lot of this falls with…

The facts were public. The analysis was not. Here's the information that the analysts were working off of: http://www.sec.gov/Archives/edgar/data/1326801/0001193125122... The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space. The "disadvantage" is to people who were blindly buying Facebook without doing due di…

I'd be very surprised if the analysts didn't have sit-down meetings with FB staff and management.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#66

Post by tatsuke95 »

guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

>"It is not possible to trust Wall Street, the whole thing is built on insider trading."

And guess where that insider trading starts? With the actual insiders. That is, the people inside the business.

People at Facebook shouldn't be absolved of blame.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#67

Post by tatsuke95 »

lmm wrote: post #44
chernevik wrote: post #32

The bankers surely know how disastrous something like this would be. Facebook has been aggressively indifferent to this whole process, which involves a lot of complexity both in decision making and communication. "Don't make the analysts look bad" is an important rule, but one that's easy to miss unless you spend some time thinking through your communications with the market. If FB's initial analyst communications em…

Does facebook actually lose anything? It sounds like they walked away with the maximum amount of money possible; the bankers might be upset, and I can see that might make it harder for facebook to raise money in the future, but they're unlikely to need to for a while yet.

Every employee who is locked into their shares for 6 months is losing money every day.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#68

Post by tatsuke95 »

thereason wrote: post #64

I'm loving this sequence of events just for opportunity to see the cognitive dissonance of some HN commenters in action. The FB IPO strategy was to wait for the peak (or "plateau", if you prefer) in their growth, collect money from the public and then, for the insiders, quickly cash out. As for why they wanted to collect money from the public through an IPO, we can call it greed, but truthfully it was also the logica…

I can't help but be disturbed that you've lumped Microsoft in with Facebook and Yahoo...twice.

Microsoft is one of the biggest companies in the world, makes a wide variety of products, both physical and digital, did $17BB in revenue in the first quarter of 2012, and has been a public company for over 25 years, returning massive value to its investors.

So what do they have in common?

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#70

Post by sparknlaunch12 »

No surprises here. I always cringe when I see 'mum and dad' flotations. These type of deals are always plagued with bias, mostly in the favour of the big guys.

The poor retail investors get sucked in by the allure of holding a brand name or having boasting rights. This thinking is dangerous when making an investment. I doubt most people would throw $1000 on a sports bet but quite happily to throw in more on buying a 'big name'.

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