Facebook Case Study Essay Example for Free

Facebook Case Study Essay EXECUTIVE SUMMARY A firm that has been floating on the stock exchange has been selected and evaluated and the firm I have chosen was Facebook. In my report I have included the recent history of Facebook as to how the social networking site started and the developments from the introduction until recently. I furthermore went on to evaluate the source of finance with a brief explanation as to what source of finance is and the different type of sources available to business i. e. Short term , medium term and long term. This explains the type of finance business need starting from day to day transactions to long term purchasing of assets and investments. After my understanding of what sources of finance are, I done some research on Facebooks source of finance and came to a conclusion that the firms sources of finance is long term source of finance as they earn money through shares(IPO). The reason for Facebooks floatation was simply because at the time they decide to go public the firm was already valued as one of the top companies around, however even though the firm was highly valued there was still negative stories about the firm. Facebook continues to grow and to try and keep the 200 million users entertain there are now talks of a Facebook phone that is due to be released this year. INTRODUCTION I am required to select a firm that has floated on the stock exchange in the last 4 years analyse and critically evaluate the firms decision to go public. The firm I chose was Facebook and in my report I will be discussing the following about the firm. Recent history of the company The firms sources of finance/ Capital structure of the firm Reason for flotation Implications of the flotation Performance of shares since flotation Future prospects for the firm Recommendations as to the future financing ABOUT FACEBOOK Facebook is a popular social networking website whose name originated as a nickname of directories handed out to university students that aided in them getting to know their fellow students. The social networking site was invented by Harvard computer science student Mark Zuckerberg, along with a few class mates. Facebook officially started off in October 2003 when Zuckerberg launched Facemash.com to allow visitors to compare pictures of two students and say whos hot and whos not. The website became popular as people enjoyed going on the internet and checking out pictures of their friends. In January 2004 an article in the Harvard Crimson stated that Zuckerberg registered the Facebook.com domain as he was now inspired by the success of Facemash. Shortly after the launch of Facebook the website eventually grew as it was now discovered by Sean Parker (Former Co Founder of Napster) who informally advised the student on what to do, and by June 2004 Facebook received its first private investment from Peter Theil [http://www.youtube.com/watch?v=ROrUea0gLlY], the founder of PayPal who gave $500 000 in exchange for 10.2% of the company. Sean Parker later became president of the newly incorporated company Facebook. Facebooks domination continued to grow until it became the second most visited web property online. In August 2009 Facebook acquired the real time new aggregator site friends feed and in 2012 Facebook made a huge splash in the market by acquiring instragam for approximately $1 billion. This year Facebook has introduced a graph search to help users find out more about their friends and connections. This feature lets you search through data shared by friends to discover people their interest, restaurants, much and much more. This is the first major step Facebook has taken towards competing with Google. SOURCES OF FINANCE Business needs money to support investment and finance their day to day activities. A company may choose to raise money internally (by retaining and investing profits) or externally. Each source of finance has a risk attached to it, the risk that the business will not meet the financial commitments related to the source. The mix of all the financial sources is known as the financial risk of the company. An essential requirement in raising finance is that business should meet repayments and other expenses, as the fall due. This is generally achieved by ensuring that there is a good match between _cash inflow generated by the use of money and cash outflows to the service payments to the finance raised_. TYPES OF SOURCES OF FINANCE. Short term finance- Usually needed for a business day to day operations e.g. paying wages, ordering suppliers etc This is usually the cheapest one to use as it is easier for a lending institution to asses lending risk for shorter loan periods. Types of short term finance include the following: Overdrafts Short term loans Trade credit Accrued expenses and deferred income Factoring Medium term finance- This source of finance can be used to finance the acquisition of Motor Vehicles, Machinery, Computers, etc. Three main types of medium term finance are: Hire Purchases Leasing Term Loans Long term finance- In financing the purchase of a building (major investments), long term finance would be appropriate. There are two alternative methods of raising long term finance Debt-Bank loans and Bonds Equity-is an important source of long term finance and consists of: Preference shares, Ordinary Shares and Retained Profits (internally generated cash flow). Equity finance is raised through the sale of ordinary shares to investors and can be raised either via: A new share IPO ,Placing or Introduction A rights Issue. FACEBOOKS SOURCES OF FINANCE/CAPITAL STRUCTURE. Facebooks source of finance is the long term finance as the firm makes its money through sale of ordinary shares from investors such as IPO (Initial Public Offer) which is the first offering of shares to the general public. The social networking site officially filed for an IPO on February 1 2012. The preliminary prospectus declared that Facebook was seeking to raise $ 5 billion in investment at the time the company announced that they have 845 million users active on the site with close to 2.7 billion likes and comments daily. After the IPO, Mark Zuckerberg planned to retain 22% ownership stake in Facebook with 57% of voting shares which was valued by the underwriters as being worth $38 each and pricing the company at 104 billion, the largest valuation ever to date for a new company going public. Facebook selected Morgan Stanley as the lead advisor for the IPO as the company had earlier lead the IPO of internet giants like Group on, Zynga and other banks such as Goldman Sachs, Bank of America Merril Lynch,Barclays Capital and JP Morgan. According to AllFacebook , shares have been actively trading between $25-$40 which gives Facebook a valuation of approximately $17000, more than Microsoft which was valued at $15000.Most of Facebooks trades takes place through secondmarket a company responsible for generating a market around typically illquid assets while while the value of the trades is unkown.While Facebook stock is not the type of thing you can trade in a day due to the fees and time involved in transactions ,however most investors see a great return in just 6 months. BELOW IS A GRAPH WITH FACEBOOKS SHARE PRICE IN MAY 2012 WHEN FACEBOOK DECIDED TO FLOAT.GRAPH 1.1 REASON FOR FLOTATION The reason for Facebooks flotation was due to the fact that the companys IPO was valued as one of the best amongst top companies. When Facebook made its long expected debut as a public company, the social networking company linked up with the largest public companies in the world alongside Mc Donalds , Amazon.com and Bank of America. The wall street journal reported that Facebook was prepared to file initial paperwork for an offering that could raise as much as $10 billion. As the news about Facebook spread worldwide and it later became the most popular and influential global website, Investors now started to flock to acquire shares in Facebook. Articles stated that even though Facebook was valued a high price there was still a debate within business and media circles on the true value of the company. The social networking site also made money through advertising allowing other companies to advertise about their business on the website. In May 2012 Mark Zuckerberg and other executives began a road show to persuade institutional investors to buy shares before the flotation. One of the underwriters JP Morgan along with Goldman Sachs and Morgan Stanley were included in the road show. IMPLICATIONS OF THE FLOATATION FOR THE FIRM Even though there is a great amount of effort in the flotation of Facebook there are still some negative views on the social site. An article in the guardian called _Facebook flotation: three reasons to avoid it_ it states that Facebook is not worth $100 billion and that Zuckerberg has not put a price tag on his creations so its still early to say that he will attempt to achieve that amount when the flotation started. Below are the three reasons given in the article: Zuckerbergs first letter to the potential investors was a strange dispatch. As it stated that Facebooks ambition was to build a service that gives people the power to share and help them once again to transform many of the core institutions and industries. Facebook has no need to float as it does not need to invest as the firm is profitable and generates enough cash to pursue its current objective. Zuckerberg is keeping control of Facebook by adopting a dual voting structure with him and investors. In response to the negative publicity about the website , Facebook opposed by saying that the main reason for floating is to allowing longstanding investors to cash in a portion of their winnings and to help Facebook grow. The float promoters were then seeking to emphasize that the investments obtained were potentially for a profitable growth and to play down the risk faced by the firm. PERFORMANCE OF THE FIRMS SHARES SINCE FLOATATION Zuckerberg has called the stock performance disappointing. The social networking leaders stock has lost nearly half its value since flotation. More than $50 billion has been cut off Facebooks market value as the companys shares have fallen from $38 to $19.43. The CEO has lost the most as the value of his facebooks holdings falls more than $9 billion which questioned his skeptics and guess his ability to lead a company. The performance of the shares has obviously been disappointing and has caused some demotivated employees, however Zuckerberg motivated them and they believed that things will improve as time goes go on. After numerous up and downs and significant critics from the public the share prices started showed a highly volatile behaviour with prices as low as $17.73. The prospective performance of the company did not impress the investors and therefore had a impact on the company as a whole. In November 2012 Facebook shares has shown a significant rise in value reaching the highest price in months, As the value it continued rising the company witnessed an increase of 15% each month to date. The major factor that has pushed the social networkings markets performance is the increase in investors confidence in the companys potential to earn a higher revenue in the prospective periods. The confidence is directly linked to the increasing success of the performance as the number of business advertising on the website increased which means higher revenue and higher revenue means higher returns for investors. FUTURE PROSPECTS FOR THE FIRM Facebook has and always will be the king of the social media sites , as the site is still growing worldwide. To date the social networking website has more than 200 million registered users. Researchers believe that Facebook can evolve another google as they are also relying on advertising for their revenue. The social networking sites goal now is to create a personalized digital newspaper through the newsfeed that has everything a person would want to know about people. This will be perfectly customized just for the users. Mobile will be the key to Facebooks future growth said the head of advertising as only 30% of users access through desktops and 70% through mobile devices every day. A plan to invest a huge amount of money will be the target for Facebook in the future as talks on creating a Facebook smartphone continues. Facebook is also targeting other continents like Asia, Latin America and Africa as users in these areas have grown by 33% each year. Even though they introduce the mobile device Facebooks ultimate goal will  still remain to get more users online and to improve current features that will keep current users entertained. CONCLUSION /RECOMMENDATION TO THE FIRMS FUTURE FINANCING Facebook is available to everyone all over the world and there still huge potential for growth for the firm. My recommendation to the firm regarding their finance would be to focus on their advertising model, improving it and allowing business to advertise more on their website. By doing that they will do enhance their chances of doing better than search engine giant Google and revenue will increase which will benefit both the firm, current and potential investors. With the introduction of the new Facebook phone they have to ensure that the phones are better then other smartphones. Facebook has to earn the general publics confidence in them by coming up with new ideas on their IPO, if the public is satisfied they will invest more in the company. However with the introduction of the new phone I believe share prices will increase.

Italian Neorealism Essay -- European Cinema

The aim of this report is to discuss Italian Neorealism (Neorealismo); looking at how the movement played a significant element in European cinema during and after the times of Benito Mussolini’s fascist regime. The report not only looks at how but why Neorealism became a growing phenomenon for filmmakers during its debatable 10 year period, and what implication of messages these Neorealist directors were trying to send out through their films. Backed up by several reliable book sources, the evidence for this report will also highlight the influences Neo-realism has created in modern filmmaking today. Before the dawn of Neorealism, Italy was under great turmoil in the early 1920s suffering from major economic crisis, bank failures and a collapsing government, which would also mean a collapse in the Italian film industry and the ‘Silent Era’ of cinema (Roberts, 2005). When Benito Mussolini took control as the 40th Prime Minister of Italy in 1922 the revival of Italian cinema would be once again be relived, but this time ruled under the control and guidance by Mussolini and his fascist government (Bondanella, 2001). It was not until the mid 1930s that the brutish dictator truly recognized the potential power of media, where in 1935 a special funding was given to the production of Italian films which was used to open up film institutions like the ‘Centro Sperimenale di Cinematografia’ (CSC) film school, and ‘Cinecitta’ (Cinema City) studios in 1937 (Ruberto and Wilson, 2007). The development of these institutions sparked the appearance of early sound cinema, specializing in genres such as comedies, melodramas, musicals and historical films, but were all categorized as ‘propaganda’ and ‘white telephone’ films by many critics due... ...echoslovak New Wave, Denmark’s Dogme 95, and British Social Realism, which all can be seen as notable influences from that of Italian Neorealism. Works Cited Roberts, J. (2005), Benito Mussolini, Minneapolis: Twenty-First Century Books. Bonandella, P. (2010), Italian Cinema: From Neorealism to the Present (3rd edn), London: The Continuum International Publishing Group Ltd. Ruberto, L.E. and Wilson, K.M. (ed.) (2007), Italian Neorealism and Global Cinema, Detroit: Wayne State University Press. Reich, J. and Garofalo, P. (ed.) (2002), Re-viewing Fascism: Italian Cinema, 1922-1943, Indiana: Indiana University Press. Landy, M. (2000), Italian Film, Cambridge: Cambridge University Press. Sorlin, P. (1996), Italian National Cinema 1896-1996, London: Routledge. Shiel, M. (2006), Italian Neorealism: Rebuilding the Cinematic City, London: Wallflower Press.

Students Participation in Co-Curricular Activities

Group Discussion| October 29 2012 | John Cheok, Wai Wai and Sin Ping| Sorry, If your name are typed wrongly and please voice out if you have any problem. TQ| John: Well, we shall discuss our task given to us by Ms. Low today. So do you have anything to bring up? WW: Sorry for the interruption, but I did not pay attention during English class last week. Do you mind to explain what are we supposed to discuss? John: Everyone in the class is divided into groups and we are supposed to discuss the question that are given and present it to the class.WW: I’d appreciate it if you could enlighten me further on the question given. SP: Wai Wai, the question given to us is about students participation in co-curricular activities has not been encouraging. We are must discuss the reason and implications and not to forget, the ways to overcome it. John: I’m glad someone actually listens in class. Co-curricular activities are non-academic activities that are conducted in schools or coll eges. Furthermore, the objective of these activities is to help prepare the physical strength and mental state of students.These activities may vary from football to public speaking. WW: From my point of view, these activities help the students a lot, so I can’t understand why are their participation discourage? SP: In general, college students have not enough time. They have to juggle around with many things. Students not have many lecture and tutorial classes to attend. For example, I finished my lecture at 10am, my next tutorial class is at 10. 30 and I have to race all the way to the class that is situated so far. Let alone co-curricular activities, I don’t even have enough time to finish up my homework.John: I think we share the same opinion on this matter, there are so many assignments that I have to pass up. And the deadlines are all right next after the previous. I don’t think 24 hours for a college student is enough. I think I need 30 hours a day to joi n a co-curricular activity. WW: I agree with you on that, but if we manage our time properly, we will find out that we spend a lot of our time on unnecessary matters, for example many students are now addicted to Facebook. They log on to Facebook like every hour. And also many are addicted to Korean dramas.Instead of wasting time streaming for an episode. Why not join a co-curricular activity? SP: I’m afraid I’m not really convinced by you. One of the reasons is activities in co-curricular are not interesting. Students are learning what they have learned in secondary school again and again. The repetitive and common activities will not attract the students to participate. John: I think it is fair to say that the way to overcome this problem is by adding more interesting activities that can attract many young adults to participate and most important have fun while doing certain activity.WW: It suddenly rang in my mind that many of my friends told me this before, the act ivities conducted in co-curricular are not helpful in their future career. On one hand it may not be helpful but on the other hand it may also be less encourage because of parents objection. SP: I totally agree with you. If students take part in these activities, they will have to stay longer in college. It is normal for the parents to be worried. I understand this because my mother will also get worried of me. They are afraid that I will mix with the wrong group or even play truant.John: I rather blame student themselves to be lazy than blaming parents for not letting us join the co-curricular activities. WW: May I interrupt you for a moment? John: If I may just finish, As I was saying, if a student is hardworking and responsible, I am sure that their parents will believe them and not worried that they will mix with the wrong people neither will they play truant. WW: In that case, I’m sorry to say that I may not be able to accept that. SP: Let’s not argue further but discuss about ways to overcome this problem. John: I think a campaign will help.WW: Could you explain this matter further? John: What I was thinking just now is that the college should held a campaign to encourage the students to take part in co-curricular. In that campaign, students should be given with more details and they can also ask questions about the activities that they are keen to join. By doing this, the students might gain more interest or even be exposed to new things. SP: I see eye to eye with you about this. Besides organizing a campaign, the college can also make it compulsory to join co-curricular activities.If students refused to join, they will never graduate. WW: I concur with you on this issue, but if the college forced their students to take part in the co-curricular activities, they students will not enjoy themselves but it will even male them more stress. From my point of view, the college should reward students with credit hour. For example in Tar College, i f you join the co-curricular units, at the end of the semester, you will earn two credit hours. John: Wow, by doing this, students will gain more knowledge and also do something for them to graduate by earning those credit hours.I’m sure students in TAR College are all willing to take part in their co-curricular units. I think students will gain more experience by participating in co-curricular activities. I believe, Co-curricular activities will expose students to many new things, hence it have many benefits. To conclude our discussion, the main reason for students not to take part in the co-curricular activities is lack of time or has bad time management and to overcome it, students must learn to distribute their time not only for their academic but also for some co-curricular activities.

Colleges and Universities in Chicago