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Facebook takes first steps toward IPO

Facebook has set the ball rolling on its hotly-anticipated IPO – the company has filed its preliminary prospectus and as rumoured, is seeking to raise US$5 billion.

Facebook has set the ball rolling on its hotly-anticipated IPO – the company has filed its preliminary prospectus and as rumoured, is seeking to raise US$5 billion.

Mark ZuckerbergPhoto: Guillaume Paumier, Wikimedia

The filing is the first step toward becoming a publicly-listed company, though various media have cited sources as saying Facebook hopes to raise as much as $10 million when it does go public in the coming months. Facebook could be valued at up to $100 million.

In comparison, Google's 2004 IPO raised $1.9 billion.

The full filing is available here.

The document shows the majority of Facebook's $3.71 billion revenue comes from advertising, with Zynga accounting for 12.5 percent of that through users buying virtual goods and services within games via Facebook credits and plain old direct advertising.

Its partnership with gamemaker Zynga is not without risk, as Facebook points out. The company acknowledged that if "the use of Zynga games on our platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant platform developer and our financial results may be adversely affected".

Facebook said it was likely revenue would decline as it reached higher market penetration – it has 854 million users with half logging on daily.

Founder Mark Zuckerberg, who started the social network in 2004, became the world's youngest billionaire in 2008. He owns 28 percent of Facebook and made $1.5 million as the CEO in 2011 – a base salary of $500,000 plus $220,500 bonus and other perks including use of personal jets.

But he's imitating the late Steve Jobs and has requested his salary be reduced to $1 from 2013.

Further links:

Mashable's Facebook IPO infographic

Zuckerberg's letter to investors

The IM messages that started it all – Business Insider

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