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Facebook: The world's third-biggest population readies an IPO

These are stories Report on Business is following Wednesday, Feb. 1, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Investors await Facebook Forget about manufacturing stats and the corporate earnings on tap. Today's big event is expected to be the kickoff of Facebook's eagerly-awaited initial public offering.

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As Simon Avery writes in today's Report on Business, the social media giant is expected to file regulatory documents today that would set the stage for the biggest Internet-related stock offering ever.

"Fifteen years ago, AOL was the Internet to most people, five years ago it was Google, now Facebook is the Internet," Lise Buyer, a former Google executive, told The New York Times.

"Facebook's IPO will prove that there is an enormous amount of money to be made in the social media space."

Reports suggest Facebook will opt for a small debut of, say, $5-billion (U.S.) to $10-billion, but that would value the Mark Zuckerberg production at up to $100-billion.

Facebook's growth is staggering.

After just seven years, having famously started in Mr. Zuckerberg's dorm at Harvard, it has 800 million users, which is expected to grow to 1 billion, effectively closing in on the populations of China and India. Last year's revenue was estimated to top $4-billion.

EC kills NYSE-Deutsche Boerse deal Europe's antitrust regulators have killed the blockbuster marriage proposed by NYSE-Euronext and Deutsche Boerse.

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The European Commission killed the deal over concerns of dominance in the derivatives market.

"The merger between Deutsche Boerse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide," Joaquin Almunia, the EU's competition commissioner, said in a statement.

"These markets are at the heart of the financial system, and it is crucial for the whole European economy that they remain competitive. We tried to find a solution, but the remedies offered fell far short of resolving the concerns."

The NYSE said today the two exchange operators are now in talks to kill their agreement, and that it now plans to resume its $550-million (U.S.) share buyback program.

"While we are disappointed and strongly disagree with the EU decision, which is based on a fundamentally different understanding of the derivatives market, it is now time to move on and return our sole focus to executing our compelling existing strategy – a strategy we have continued to implement without missing a beat over the last year," NYSE chairman Jan-Michiel Hessels said in a statement.

Markets rise Those manufacturing numbers I just suggested ignoring are, however, helping to boost the mood of investors today as they indicate a better-than-expected performance in China and Europe.

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"Bulls in the stock market have had a rather trying week so far, and they had looked to today's economic figures from China to provide the necessary impetus to lift markets," said Chris Beauchamp of IG Index.

"Their patience was well-rewarded; manufacturing figures from the Asian titan moved back into expansion territory, easing fears that the new workshop of the world was undergoing a slowdown. This good start to the day was followed up by manufacturing data from Germany and the U.K., both of which showed improvement for January."

Asian markets weren't so hot, with Tokyo's Nikkei gaining less than 0.1 per cent and Hong Kong's Hang Seng dipping 0.3 per cent, but European stocks kicked into higher gear, followed in North America by the S&P 500 and Toronto's S&P/TSX composite .

London's FTSE 100, Germany's DAX and the Paris CAC 40 were up by between 1.3 per cent and 1.9 per cent by about 8:45 a.m. ET.

"There are reports that Greek bondholders will receive a GDP-linked warrant as part of the planned debt swap, providing some chance for gains depending on the performance of the Greek economy," said Benjamin Reitzes of BMO Nesbitt Burns.

"That will ease their pain at least modestly. Meantime, Germany sold €4.1-billion in 10-year bunds this morning, seeing a solid bid-to-cover. Commodities are mostly higher: WTI crude oil is up 0.9 per cent to $99.30, gold is up $8 to $1,746, base metals are stronger (COMEX copper is up 0.8 per cent), while grain prices are gaining ground as well."

Manufacturing picks up The world's factories continue to churn it out, though not at any remarkable pace, while the differences among European industry are notable.

Manufacturing purchasing managers index released in China, Germany, Britain, the United States and other countries all showed some strength today.

China's PMI rose to 50.5 in January, compared to 50.3 a month earlier. The 50-mark is key in these readings as they separate contraction from expansion, and China's measure again eased fears of a hard landing.

"The significance is that the market was expecting a read of 49.6, indicating contraction in the manufacturing sector," Derek Holt and Dov Zigler said of the number in China.

"While the 50.5 number is not staggeringly high (China's manufacturing PMI was lower for only one month in 2010, and ran higher throughout the entire period from March 2009 until October 2010), it is another indicator suggesting that the Chinese economy is muddling through and not experiencing the worst-case 'hard landing' that many analysts anticipated with dread."

In the United States, the measure rose to 54.1 from 53.1.

"It's not just China seeing an expansion in factory output in January," said senior economist Krishen Rangasamy of National Bank of Canada.." A now meaner and leaner U.S. manufacturing sector continues to increase output."

The differences in Europe, however, were stark, however, illustrating the various speeds at which those economies are operating.

In Germany, the continent's strongest and biggest economy, the measure inched up to 51 from 50.9, while France, Italy and Spain contracted, though at a slower pace in the latter two. Overally in the EU, the reading was little changed, at 48.8 compared to 48.7.

"But that number only draws more attention to the diverging economic within the European Community," the Scotia Capital economists said.

Target reaches deal with Fairweather U.S. discounter Target Corp. has reached a deal to stop a Canadian competitor from using its name, The Globe and Mail's Marina Strauss reports.

Target said today it struck the agreement with Isaac Benitah and his company, Fairweather Ltd., under which he will stop running his own Target clothing stores by Jan. 31, 2013.

CGI profit slips Canada's CGI Group Inc. got off to what it says was a strong start to the fiscal 2012 year, with almost $1.5-billion in new contracts, though lower profit and revenue.

Profit at the Montreal-based IT and business services company slipped to $106.5-million or 40 cents a share, dilute, from $126.7-million or 45 cents. Revenue fell to $1.03-billion from $1.09-billion.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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