Most Popular Choices
Share on Facebook 22 Printer Friendly Page More Sharing
Exclusive to OpEd News:
OpEdNews Op Eds    H3'ed 5/18/12

Cashbook

By       (Page 1 of 2 pages)   No comments
Message David Cox
Become a Fan
  (90 fans)

Cashbook

By David Glenn Cox

 

Facebook
Facebook
(Image by facebook)
  Details   DMCA

 

Question- What are the advantages and disadvantages for a company going public?

Answer- " An initial public offering (IPO) is the first sale of stock by a company. Small companies looking to further the growth of their company often use an IPO as a way to generate the capital needed to expand. Although further expansion is a benefit to the company, there are both advantages and disadvantages that arise when a company goes public."

There are many advantages for a company going public. As said earlier, the financial the benefit in the form of raising capital is the most distinct advantage. Capital can be used to fund research and development, fund capital expenditure or even used to pay off existing debt. Another advantage is an increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers."   - From Investopedia

 On Friday, Facebook will have its Initial Public Stock Offering; The Company had over a billion dollars in profits last year and sits atop $3.5 billion in cash reserves, so what could Facebook need with mega billions in new cash? Unlike the old brick and mortar companies Facebook's product is built on bandwidth, and its revenues are electronic advertising. It cannot improve its market share because it already rules the market. Why is it then, the company is so desirous of all these new billions of dollars?

Answer- "Subsequently this may lead to an increase in market share for the company. An IPO also may be used by founding individuals as an exit strategy. Many venture capitalists have used IPOs to cash in on successful companies that they helped start-up. - From Investopedia 

Facebook cannot improve its market share because it already rules the market. It would appear that the Facebook IPO nothing more than a payday for investors, not a beginning for a company, but an end. Facebook cofounder Eduardo Saverin, renounced his US citizenship the other day, in order to save $67 million dollars of potential tax liability. Founder Mark Zuckerberg, is the largest shareholder with a controlling interest of 28.4 percent of common stock. Zuckerberg's personal fortune is currently estimated at $17.5 billion, why then does he or any of his partners need with more new money?

 Could this possibly be the right time then, to cash out? Could this be the right time to pick up their check, to reinvest it, in what? Our economy is in a prolonged drizzle, a permanent funk called the "new normal." A general consensus of the public opinion would agree the affairs of Wall Street are out of control. Could it be the IPO is more designed to buoy the market than to enrich its individual investors? Could it be a poker game, where once the winners take all the money out of the game, they must find new money to sustain the game?

 There is another component to this which makes Facebook somewhat a different animal from your average, run of the mill internet corporation. Facebook's true product is information, information culled by you, about you. This vast archive of public "likes" and "dislikes" is about to become the property of Wall Street investors. The Orwellian ideas of clicking "likes" or "dislikes," of Coke or Pepsi, Preparation H or Depends diapers boggles the mind. Centuries of intellectual evolutionary development synthesized down to twenty first century electronic cave wall scratchings of "I like plastic underpants."

 I have my own Facebook account and it has put me in touch with people whom I haven't spoken to since childhood. It can be a wonderful tool, what is to fear is what the historical record of inventions which have changed the world teaches us. Gunpowder once changed the world, initially; it was used to fuel beautiful Chinese fireworks before becoming the scourge of mankind. The Wright Brothers invented an airplane fulfilling the age old dream of mankind. In less than fifty years, that dream of mankind became a nightmare war machine bristling with weaponry and carrying tons of bombs. So what then, might become of an information collecting machine changing the world, manipulated by Wall Street investors running amok? Not that it will happen, mind you, only that it could happen.

 Fortunately, we have the dinosaur principle that would probably save us, huge dinosaurs once roamed the Earth and regardless of their size, they all shared basically the same brain capacity. Growing larger and larger only made the dinosaur slower, a lumbering behemoth endlessly searching for tons of food to maintain a brain about the size of a walnut. More than likely though, the asteroid on the horizon which will draw a curtain to the Facebook era is what I call, the Mom principle. Most of Facebook's primary users are young, will they continue to hang out where Mom might be listening? Do they really want their Mom to ask, "What's a beer bong?"

 I suppose it could be just as rightly be called the MTV principle, Facebook's loyal customer base will eventually grow up, leaving the door wide open for a new Internet competitor appealing to a younger rising generation. A new Facebook, cooler and hipper than the old Facebook, with cooler features because "like" is so something my Mom does. A new Facebook, so cool that Mom doesn't even know about it yet. Popular music is aimed primarily at teenagers, films and TV aimed primarily teenagers, and the one consistency about teenagers is that, whatever is considered so cool today, will be so uncool tomorrow. Look at the mass migration of youth from My Space to Facebook; clearly we have reached the age of the impermanence of permanence.

 The Facebook IPO will rake in billions and billions of dollars from the eager hands of investors who can't give their money away fast enough, at the exact same moment when the founders are filling their suitcases and cashing out. The market will rise on the day of this IPO generating money making potential from affiliated companies, filling brokers pockets with commissions and generating a new public interest, even if only temporarily in investing. All to try to catch a falling star or a ride on a comet's tail, investment as a   gold rush rather than as a responsible business opportunity.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Well Said 2   Must Read 1  
Rate It | View Ratings

David Cox Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

I who am I? Born at the pinnacle of American prosperity to parents raised during the last great depression. I was the youngest child of the youngest children born almost between the generations and that in fact clouds and obscures who it is that (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Hobo's Lullaby

100 Reasons for Revolution

Guns or Butter

Taken at the Flood

When will the Economy Collapse? You're Looking at It!

In this Country at Least, The Revolution Will Not Be Televised

To View Comments or Join the Conversation:

Tell A Friend