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Facebook CEO Running From Investors 'Cause He IS The Only Investor Whose Opinion Actually Counts?

Reggie Middleton's picture




 

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Is Facebook's CEO Running Away From Investor Responsibility Because He IS the only Investor Whose Opinion Actually Counts?

Last month I released an update to our Facebook IPO analysis (subscribers may download it here FaceBook IPO & Valuation Note Update). In its caveats section, I made pains to make very clear that one of the biggest threats to Facebook investors actually emanates from within, to wit:

 

FB_Corporate_Governance_issues_pt_1

FB_Corporate_Governance_issues_pt_2

Those who do not subscribe to BoomBustBlog yet purchased shares in the private (or soon to be public) market may be in for a rather disrespectfully rude awakening, as illu:strated in this piece from the NY Times - Face Time With Facebook CEO Stirs Concerns on Wall Street:

SAN FRANCISCO (Reuters) - Mark Zuckerberg wants at least $5 billion from Wall Street investors, but those investors will not be getting much face time in return. 

The Facebook co-founder and CEO made that clear when he skipped the social networking company's first major briefing for analysts and bankers last week. The meeting was the first of many that will take place in the run-up to an IPO that could value the company at close to $100 billion.

Zuckerberg's dismissive approach is hardly unique among elite Silicon Valley companies, but it could become an issue with investors because of the enormous control he exerts over Facebook via special shares.

"We don't think that he should be hiding from the investors," said Carin Zelenko, the director of the capital strategies department for the International Brotherhood of Teamsters, whose pension and benefit funds have more than $100 billion invested in the capital markets

Pissing off a $100 billion investor is an absolutelhorrible way to kick off life as a public company. Suppose, just suppose, said investor becomes activist... Oh yeah, on that note...

According to Zelenko, the Teamsters will send a letter to the trustees of the various Teamster funds advising them to be wary of long-term risks associated with investing in Facebook as a result of its "anti-investor" corporate governance structure.

Maybe he should send BoomBustBlog subscriptions and custom advisory services to said teamster funds, eh? :-)

Two people who attended Facebook's March 19 meeting remarked on the young CEO's absence and privately said they expected at least a cursory appearance. One analyst asked how involved Zuckerberg would be in future. In response, the company said expectations should be set pretty low, according to one of the two who was at the meeting.

"Investors are crazy to want to get in bed with a company where the guy who controls it doesn't even pretend to care about the rest of the shareholders," said Greg Taxin of activist investment firm Spotlight Advisors, who will not buy shares. "That seems like a recipe for disaster." 

And now is the time to pretend that investors prefer to consider what the best long term investment is as opposed to what the sell side peddles them???

As a private company backed by mostly venture capital, Zuckerberg enjoyed great leeway in choosing how to spend his time. But Zuckerberg will control 56.9 percent of post-IPO voting shares thanks to a dual-class stock structure and voting agreements with some early investors, and may face pressure to be more available to investors.

I think these guys are missing the most salient point. Zuckerberg IS the "investor[s]", at least from a control perspective. He just wants your capital, the actual control behind the capital is, and apparently will be for the foreseeable future, his! Will this be a good deal for the guys who part with their capital yet get no control or rights in return? Well, of course it is if Facebook goes to the moon and back in regards to growth and valuation. But will it???

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For the moment, with investor enthusiasm for Facebook burning hot, the dual-class structure and Zuckerberg's lack of engagement are not likely to have a big impact on demand for the shares.        

Of course Facebook enthusiasm is burning hot. The coals in the "investor" (and I put this lightly) fire are being stoked by none other than the sell side agents doing God's work, among others...

Professional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012. The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update. It is recommended that subscribers (click here to subscribe) also review the original analyses (file iconFB note final 01/11/2011) as well as the following free blog posts on the topic:

  1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
  2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
  5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
  6. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
  7. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly
 

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Thu, 03/29/2012 - 18:23 | 2302043 MeelionDollerBogus
MeelionDollerBogus's picture

I only ever used facebook for sharing news, much of it from zerohedge. I never shared my personal info & I think they hated that. I had it shut down involuntarily before because of this & I finally shut it down myself. I figure making my own zerohedge account to reply was better, plus twitter to share links. For the rest of personal contact that's what phones & email are for.

Thu, 03/29/2012 - 13:13 | 2300962 Pitchman
Pitchman's picture

Nice work.  This is indicative of the hubris that drives a market whose trajectory is dependent on insiders "doing God's work".  Again; the assured winners are those on selling end of what may be the largest Red Herring in history. 

Look at what is happening to the Carlyle Group IPO ... bad intent from the very beginning.

"Has The Rank Criminality MF Global Greased The Skids For Carlyle Group's IPO?

Or, is it just a foisted "red flag" as the Washington based asset management firm puts itself up for half of it's rival Blackstone group's IPO, though each has about $150 Billion under management. Whatever the case, their one sided deal could be greed shooting itself in the foot.

Talk about negative baggage: Bin Laden, inside dealings with the House of Saud, terror ties and blatant conflicts of interest between their adviser Bush Senior and GW.  Who knew, but the Saudi Binladin Group has increased its US government contracts substantially since 9/11 and Carlyle group is right in the middle.

As the most negatively lopsided IPO in history who in their right mind will invest in these sociopathic baby killers?

"When people whose job is to buy low and sell high – and who have done a pretty damn good job doing it – are selling, why the hell would you be buying? Do you think you’re going to get a better return than they are? Best of luck!" -  Stone Street Advisors...

Aside from the putrid odor can anyone smell a market top?"

See: WAR PIGS: Carlyle Group's Lopsided IPO That No One Cares About

Thu, 03/29/2012 - 12:21 | 2300913 indio007
indio007's picture

Sarbanes Oxley? BWAHAHAHAHA!

 

Thu, 03/29/2012 - 13:27 | 2301129 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

I don't laugh about SOX when it seems like I have to change my passwords every fifteen minutes.

Thu, 03/29/2012 - 11:21 | 2300704 lakecity55
lakecity55's picture

What a scam. All they produce is intel for TPTB.

They want investors to pick up the cost of gathering intel on themselves.

Thu, 03/29/2012 - 11:36 | 2300767 malikai
malikai's picture

Sounds like a fantastic business model in light of our current state of affairs. But I'm not buying. I see FaecesBook going the way of the Myspace in time.

Thu, 03/29/2012 - 11:05 | 2300601 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Facebook = place for narcissistic people with low self-esteem to post trivial nonsense & minutiae to make themselves feel important.

Thu, 03/29/2012 - 11:20 | 2300688 fonestar
fonestar's picture

But at least Facebook is a "green company".  They don't use anything and they don't produce anything either!

/sarc

Thu, 03/29/2012 - 10:35 | 2300497 Careless Whisper
Careless Whisper's picture

Good call Reggie.

Facebook is just a fancy Rolodex with a personal web page to talk about yourself, as if anyone cares or has the time.

 

Thu, 03/29/2012 - 10:05 | 2300387 Zero Govt
Zero Govt's picture

Reggie, agreed Mr Zuckerberg should have made a stage appearance to meet investors (if that's as billed) but he does look a shy type (nerd) and i suspect this Goldman IPO (and valuation) is all a bit too much for him

On the larger point about Zuckerman keeping almost complete control of his baby, wouldn't you? 

There is no advantage, commercial or otherwise, to having shareholders on the Board for example. Who'd want the Teamsters Union friggin in the rigging at meetings which are a total waste of time/energy anyways!

If the Executives are a bunch of pirates robbing the company with big Exec bonuses while the company is going down the toilet (as Facebooks IPO partner, Lloyd Blankfein is doing at Goldmans for example) then shareholders should have the voting rights to remove said corporate parasites

So i don't see what the issue is with control nor if it spells any 'logical' danger signs ahead

Thu, 03/29/2012 - 19:51 | 2302230 Tom Terrific
Tom Terrific's picture

Zuckerberg is a nacissistic sociopath not a "nerd."

Thu, 03/29/2012 - 14:55 | 2301435 jcaz
jcaz's picture

There is a difference between "shy" and "clueless";

We're staying away from this mutt- the dude hasn't shown the capacity to run a 7-11....  Lot of hype, but he's not the brains of this pig.

Thu, 03/29/2012 - 10:19 | 2300430 Imminent Crucible
Imminent Crucible's picture

Shy? He's not nearly as shy about interfacing with the media as he is about checking in with the shareholders.

Maybe you didn't notice, but your arguments strongly favor avoiding this company. It's going to be good to Zucker, but not necessarily as good to the "swirling mass of gray and black and white".

Remember when everyone loved GOOG at $750, before it went to $250?

Thu, 03/29/2012 - 10:41 | 2300518 Zero Govt
Zero Govt's picture

for the record i hope FB tanks ...most of all while Goldmans are still holding the bag

Thu, 03/29/2012 - 09:32 | 2300298 nah
nah's picture

if you use facebook and have money lying around

.

nows your chance

Thu, 03/29/2012 - 09:24 | 2300262 Crispy
Crispy's picture

I wouldnt even wipe my rear with this paper.

Thu, 03/29/2012 - 09:50 | 2300119 Zero Govt
Zero Govt's picture

News today on the FT that some FaceBook profiles are "fakes"

Have they seen the fanciful Pump & Dump of Goldmans IPO prospectus for FascistBot ???

Priorities Mr Zuckerberg, priorities

Thu, 03/29/2012 - 09:51 | 2300350 adr
adr's picture

SOME???

Try millions. Facebook and other online corporations pay PR agencies to create thousands of profiles and blog posts bragging about how great site xxx is every day.

I remember when I interviewed for a marketing job at a company which was growing fast using guerilla marketing, the new hottest trend. During the interview I was told the types of things I would be responsible for. I said, isn't that illegal. The reply was, yes it technicaly is illegal but most of what we do is illegal which is why companies hire us to do this kind of work so they have deniability if we are caught. I said, ohh OK and got up and left.

You don't think all those hot girls asking to be your friend are real do you? Millions of Facebook profiles have been created for spam purposes and tracking personal information. A few idiots accept the friend request from the hot girl giving the russian data miner access to all their personal information.

Thu, 03/29/2012 - 10:12 | 2300410 Zero Govt
Zero Govt's picture

Agreed.

I'd recommend anyone on Fascistbot write a load of absolute fuking baloney on their likes and dislikes etc, make some 'unique' and then if you get hit with a "You like lemon sorbet, we have them on 30% Sale this week" advert (i hate sorbet) then you know you're being a plucked factory farm chicken

with Big Corpse you're always a number, so fuk up their databases they can't comb them individually

Fri, 03/30/2012 - 10:37 | 2303431 DaveyJones
DaveyJones's picture

think we talked about this before. I love the idea. Keep posting random shit just to throw them. Like that old Steve Martin joke - pull a trick on the kids, when you're around them,  talk wrong.  

Thu, 03/29/2012 - 08:23 | 2300109 williambanzai7
williambanzai7's picture

THE FACEBOOK PONZI GRAPH

Thu, 03/29/2012 - 16:29 | 2301752 Stax Edwards
Stax Edwards's picture

Facebook is a data mining/privacy surrender site with a neat side effect of being able to connect with others. 

Dis: Never had a facebook account, never will.

Something wrong with a Hotel California business model, no?

Thu, 03/29/2012 - 07:39 | 2300030 bank guy in Brussels
bank guy in Brussels's picture

The CIA funding at the origin of Facebook -

« ... funding into Facebook ($US12.7 million) came from venture capital firm Accel Partners. Its manager James Breyer ... served on the board ... of In-Q-Tel, a venture capital firm established by the Central Intelligence Agency in 1999. One of the company's key areas of expertise are in "data mining technologies". »

http://adventofdeception.com/facebook-ciacover-nwo-agenda/

Quite funny - 'satire' but truthful - Onion News Report on the CIA's Facebook project:
http://www.youtube.com/watch?v=cqggW08BWO0

The CIA's main internet tool, Google Inc. - Here is Google's censoring of an important political refugee from the US in Belgium (whose avatar I use as a way of honouring him) - a Sachs unconnected with Goldman Sachs:

Live Photo: Google Inc. Caught Censoring EU Search Results (for USA - CIA)
Google Internet Censorship - Censure d'Internet par Google - Internet censuur door Google
http://www.flickr.com/photos/22325431@N05/6100668211/in/photostream

'Ex-Agent: CIA Seed Money Helped Launch Google', retired intelligence agent Robert David Steele interviewed by Paul Joseph Watson, and speaking of the CIA's Dr Rick Steinheiser and his connections with Google:
http://www.infowars.com/articles/bb/google_cia_seed_money_launched_googl...

The CIA's Google involved in criminal acts against Europeans with the CIA's Wikipedia:

Current case: Wikipedia and Google in the attack on Europe, trying to murder European citizens criticising the USA:
Report to the EU Parliament and the Commission of the European Union
Anti-Competition Crimes of EU Internet Monopoly Google Inc. (with CIA) and Wikipedia (with CIA), to Erase EU Journalism, to Slander and Murder EU - Polish Citizen, Writer, Journalist,  Non-Zionist Jew, and Harvard graduate
http://www.indymedia.nl/nl/2011/07/77181.shtml

Thu, 03/29/2012 - 10:36 | 2300504 Things that go bump
Things that go bump's picture

You can tell how contemptable an entity is by the effort expended to conceal its contemptability and silence those pointing it out. The just and upright are not so insecure.  The US, or at least its government, seems to have lost its purpose and it has certainly lost any remaining visage of morality since it lost its great adversary, the Soviet Union.  I believe it may also have lost control of many of its component parts.  It now stands revealed as no more than a common thug running some sort of protection racket.  

Thu, 03/29/2012 - 17:06 | 2301868 Logans_Run
Logans_Run's picture

You are correct! The primary enemy is now the people of the United States that may wish to hold this government accountable.

Thu, 03/29/2012 - 10:10 | 2300408 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Of course we can all trust "I'm CEO, bitch" Zuckerberg. He would never hurt anyone. Not like the other founders who were screwed by him.

Thu, 03/29/2012 - 15:13 | 2301482 vast-dom
vast-dom's picture

FACEBOOK CREATED BY DOUCHEBAGS FOR DOUCHEBAGS, EXCLUSIVELY.

Thu, 03/29/2012 - 16:24 | 2301710 Lost Wages
Lost Wages's picture

Sometimes I think about going back to irritate old acquaintances during election year. Then I think better of it and do something else. College, high school, relatives. Who needs it? Those are the people I'm trying to avoid IRL.

Plus Mark ZuckerBORG probably works for the CIA.

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