FACEBOOK may delay its highly-anticipated stock market flotation until mid-June, after a string of acquisitions reportedly diverted the attention of top executives.
The Initial Public Offering was slated for 17 May, according to CNBC, but could now take place in the early or middle part of the next month.
It follows a spending spree by Facebook chief executive Mark Zuckerberg in the last two weeks. First he agreed to pay $1bn for the mobile photo-sharing app Instagram, then this week strengthened his legal war chest by acquiring 650 technology patents from Microsoft for $550m.
Facebook had identified the smartphone boom and intellectual property litigation as potentially serious threats in its pre-IPO regulatory filings. It also bought a portfolio of 750 patents from IBM in March for an undisclosed sum.
But the deals will reportedly force the dominant social network to make additional financial disclosures to the Securities Exchange Commission, causing a delay.
Facebook’s desire to avoid the Memorial Day public holiday on May 28 to ensure maximum liquidity for its IPO could nudge the first open market trades into the middle of June, it’s claimed. The pre-IPO roadshow would begin after the holiday.
The flotation will be greeted with excitement on Wall Street despite worries over Facebook's profitability. This week it revealed quarterly revenues of $1.06bn, up from $731m in the same period a year ago.
Profits dipped, however, to $205m from $233m, prompting concerns that its rapid recruitment of new members in the developing world is adding more to storage and bandwidth expenses than to advertising sales. Facebook told regulators it now has more than 900 million active users per month.
Ian Maude of Enders Analysis said the delay was necessary in light of Facebook's recent acquisitions.
"Any spending does make a difference to the financial position of the company, investors want to know what importance this is likely to have and make a decision", he said.
"[But] when you buy in you accept it’s become very big in a short space of time and its changing very quickly. You are buying into Zuckerberg and his vision for the business you have to make decisions on that.
"The long term outlook for Facebook is still very good."
The flotation is expected to raise $5bn and value Facebook at up to $100bn.