Facebook warns on Yahoo threat
FACEBOOK has warned that a legal battle with Yahoo! over patents could have a "material" impact on its business, just as the world's biggest social networking site prepares for a multi-billion dollar flotation.
The Silicon Valley company made the disclosure in an updated version of its prospectus for the initial public offering that could value Facebook at $100bn (€75bn).
Yahoo!, which is under intense pressure from its shareholders to carve out a new business strategy, filed a lawsuit earlier this month alleging that Facebook is infringing 10 of its patents that cover the technology behind areas such as online messaging and advertising. A darling of Silicon Valley in the 1990s, Yahoo! is seeking unspecified damages.
"This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to these claims, is uncertain," Facebook said. "If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations."
Facebook added that it plans to "vigorously" defend itself, and its acquisition of 750 patents from IBM earlier this month suggests it is taking the suit seriously.
Facebook's flotation is expected as soon as May.