Dawn Of The Information Era: Changing Of The Guards

For decades analysts have discussed the success of the IT industry and the brilliance of IT developments; all from a technology point of view. But the IT industry’s success is fading and, fueled by M&A, it is clear that it is quickly becoming a very mature sector where it is all about share and hardly about growth.

No wonder that 2011 saw tech companies wrestle with market conditions. But at the same time 2011 also saw a few interesting ICT-related businesses going public. Linked-in, Groupon and Pandora had their IPO’s. Linkedin’s IPO went well. They ended +90% after an initial share value of $45. Groupon ended +31% at their first trading day. Pandora, an internet radio company, ended +50% at day one. The next one is probably Zynga, a social network game developer who plans to go public this month. And next year Facebook...

It is more than rumours that Facebook wants to go public in 2012. The initial share price is still a big unkown and Facebook’s estimated value therefore varies considerably: from $40 billion to over a $100 billion. A closer look at Facebook’s history reveals that Microsoft invested $240 million in 2007 in return for 1.6% of the shares. This equals the value to $15 billion in 2007. Goldman Sachs followed in 2011 by investing $500 million in Facebook and got 1% of the shares in return. Facebook’s value: $50 billion. In less than 4 years time the value of Facebook tripled. Lou Kerner from Bloomberg even suggested that Facebook’s value could be well over $200 billion by 2015. That is not too shabby for a company that started out in 2004 collecting pictures from students. With Goldman Sachs in the driving seat a successful IPO in 2012 seems guaranteed. One almost could think that these social media businesses are beyond business reality.

So what is the reality for Facebook? With over 800 million pairs of eyeballs they have a strong advertising game. Not just plain mass advertising but ...
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