More Facebook riches all around! The company granted about $796 million in restricted stock units to employees less than a week ago, according to an amended IPO filing.

These are ”employee refresher grants,” or new grants for employees. They don’t replace existing ones. These restricted stock units, or RSUs, could be worth anywhere from $707 million to $884 million based on Facebook’s expected $28 to 35 price range per share. Of course, if people hold on for longer and the stock pops by the time their lock-up period finishes, these shares could be worth a great deal more.

Here’s the excerpt from the filing:

“On May 3, 2012, we granted an aggregate of 25,257,815 RSUs. We will determine the fair value of these grants during the second quarter. If the fair value of our Class A common stock was $31.50, the midpoint of the price range set forth on the cover page of this prospectus, the aggregate grant date fair value would be approximately $796 million.”

Remember: RSUs or restricted stock units are not actual Facebook shares. They are contracts which promise actual shares upon a certain event (like an IPO!).

Facebook originally issued RSUs because the older SEC regulations said that companies with more than 500 shareholders had to report their financial performance like public companies do. Facebook was getting close to that critical limit, so the company started issuing RSUs instead. Under the recently passed JOBS Act, however, the landscape is totally different. This rule was changed to allow up to 2,000 shareholders excluding employees. So now companies can keep their numbers private for much, much longer.

RSUs have one other major benefit that sets them apart from options: employees don’t have to pay to exercise them. The downside is that they’re taxed as ordinary income (which could mean around a 45 percent tax rate with state taxes and Social Security contributions). Normal shares are taxed under the 15 percent capital gains rate.

On a separate note, on the same day that Facebook awarded these units last week, the company said that many early shareholders including CEO Mark Zuckerberg, Accel Partners and more were selling up to $5.5 billion in stock during the IPO.

Article courtesy of TechCrunch

Facebook just filed a new S-1 with the SEC. We’ve sifted through what’s new and one noticeable change is the inclusion of commentary about Yahoo’s patent suit against Facebook as a risk factor.

From the filing: “From time to time, we receive notice letters from patent holders alleging that certain of our products and services infringe their patent rights. Some of these have resulted in litigation against us. For example, on March 12, 2012, Yahoo filed a lawsuit against us in the U.S. District Court for the Northern District of California that alleges that a number of our products infringe the claims of ten of Yahoo’s patents that Yahoo claims relate to “advertising,” “social networking,” “privacy,” “customization,” and “messaging.” Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement, and an injunction.”

As we heard a few weeks ago, Yahoo is suing Facebook over alleged infringement of ten “method” patents by the social network. You can read more details about the patents in question here.

Facebook says it has not yet filed an answer or any counter claims to Yahoo’s complaint, but does “intend to vigorously defend this lawsuit.” Also, Facebook states: This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to these claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations.

In the previous S-1 filing frpm early March, Facebook acknowledged that Yahoo sent a letter alleging that the social network was infringing on their patents. At the time, Yahoo had not yet filed the lawsuit. Now that legal action has been taken, Facebook is recognizing this in the filing. The takeaway here is that Facebook is recognizing that the Yahoo suit is a risk factor for the company and could have a negative impact on its business. Last week, Facebook announced it would be buying 750 patents from IBM to shore up against potential legal attacks from patent trolls.

In relation to another legal matter, Facebook also added its intentions to dismiss Paul Ceglia’s lawsuit. From the filing: On March 26, 2012, we filed a motion to dismiss Mr. Ceglia’s complaint and a motion for judgment on the pleadings. We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud on the court and we intend to continue to defend the case vigorously.

Article courtesy of TechCrunch

Zynga has just released a new S-1 in connection with its secondary offering. The company is looking to sell up to 43 million shares (42,969,153 shares to be exact). Zynga’s CEO Mark Pincus will sell 15 percent of his shares, which is worth around $227 million based on yesterday’s stock price. Pincus’ voting power post-sale will go from 36.5 percent to 35.9 percent, according to the filing.

Investors IVP, SilverLake, Union Square Ventures, Google, Reid Hoffman are also selling in the offering, as is board member Jeffrey Katzenberg. Owen Van Natta, General Counsel Reggis Davis, COO John Schappert and CFO Dave Wehner are selling shares as well (see chart below).

Other employees (larger shareholders) who holding an aggregate of approximately 114,000,000 shares will be released from lock-ups to allow them to sell shares, on closing of the offering. But these employees will still be subject to a blackout period and won’t be able to sell until after the company’s first quarter earnings release in the last week of April.

As we reported a few weeks ago, Zynga is trying to manage the lock-up period for employees that could negatively affect the company’s share price. The company says it’s doing this to “facilitate an orderly distribution of shares and to increase the company’s public float,” basically trying to avoid a situation that has happened to other companies with recent initial public offerings where employees dump stock and the share price plummets.

Another interesting tidbit from the filing: we know Zynga bought OMGPOP, the maker of massive Pictionary-like hit Draw Something, as the company announced this week. We’d heard the acquisition price was around $210 million. In the filing, Zynga states that it bought the game developer for a “purchase consideration of approximately $180 million in cash.”

The company also said that its top three games accounted for 83%, 78% and 57% of its online game revenue in 2009, 2010 and 2011, respectively.

Zynga’s share price closed at $13.74 in yesterday’s trading.

Article courtesy of TechCrunch

Within Facebook’s S-1, the social network revealed that its Payments business is bringing in $557 million in revenue per year. As the company explains, it currently requires Payments integration in games on Facebook. But according to the filing, Facebook is considering what could be very big moves in the payments space.

From the filing, Facebook writes that “we may seek to extend the use of Payments to other types of apps in the future.” It’s not specific about what these other apps are, but they could include anything that somehow uses Facebook. Dating apps, social shopping apps, news-reading apps — who knows? The filing is meant to paint a broad picture of where Facebook is headed, and the line could just be a simple aside for potential investors. But still, any developer running payments in a way that connects to Facebook should keep it in mind.

Currently, via its payments product, Facebook is taking a 30 percent cut of all payments of virtual goods transacted within games on the network. Zynga accounted for approximately 12% of Facebook’s revenue, much of which was comprised of revenue derived from these payments processing fees. Payments are a huge revenue generator for Facebook.

Facebook says that in the future, it will be invested in ‘enhancing’ payments offerings and “in making the Payments experience on Facebook as convenient as possible for users and Platform developers.” the company also states that financial results each quarter will be based on the Facebook’s “ability to increase payments and other fees revenue.” Facebook is also anticipating a rise in payment processing costs as the company “increases Payments volumes and add new payment methods.”

Some of the challenges to a more expansive payments products, says Facebook, are regulatory issues on the U.S., Europe and in other countries. From the filing: To increase flexibility in how our use of Payments may evolve and to mitigate regulatory uncertainty, we have applied for certain money transmitter licenses and expect to apply for additional money transmitter licenses in the United States, which will generally require us to demonstrate compliance with many domestic laws in these areas. this refers to the fact that Facebook has been creating separate entities for its Payments product.

There is certainly no guarantee that Facebook is going to become the next PayPal, but considering the amount of times the payments business was mentioned in the filing, as well as statement of the potential plans for expansion, it could be a significant business in Facebook’s future as a public company.

Article courtesy of TechCrunch

As the company prepares for a public offering in the next year, Skype released an updated S-1 filing that includes several new revenue, income and usage numbers. As you may have heard, Skype initially filed for an IPO registration statement with the SEC, with the maximum proposed offering amount listed as $100 million (that is a placeholder amount.) It was thought that the IPO would take place early this year, but apparently the company’s newly appointed CEO Tony Bates is looking for more time to get Skype “in better shape.”

Skype says that it has grown its average monthly connected users by 38% (to 145 million average monthly connected users) and has grown average monthly paying users by 19%, from the three months ended December 31, 2009 to the three months ended December 31, 2010. Average monthly paying users have increased from 7.3 million to 8.8 million users, and Skype is seeing an average of $97 in revenue per paying user. From December 31, 2009 to December 31, 2010, Skype has grown registered users from 474 million to 663 million users.

Net revenues increased by 20% from $719 million in pro forma 2009 to $860 million in 2010, and Adjusted EBITDA increased by 43% from $185 million in pro forma 2009 to $264 million in 2010. Skype’s net loss in 2010 was $7 million, compared to a net loss of $418 million on a pro forma basis in 2009 (which includes a $344 million charge incurred the settlement in the Joltid Transaction).

Skype ended 2010 with 911 employees, up from 733 in December 2009. Skype acquired mobile video startup Qik in January for $121 million in cash with $29 million in additional payments. As part of the acquisition, Skype added 63 employees from Qik.

In 2010, Skype users made 207 billion minutes of voice and video calls. In the fourth quarter alone, video calls accounted for approximately 42% of all Skype-to-Skype minutes, and in 2010, users sent over 176 million SMS text messages through Skype.

Another interesting tidbit from the filing—Skype’s primary source of revenue has been from the purchase of credit (on a pay-as-you-go or subscription basis) for the company’s SkypeOut product, which provides calling to landlines and mobile devices.

There are four contributing factors that Skype says will help increase revenue. First, the company’s userbase is rapidly growing as mobile broadband access increased. Skype also plans to increase awareness and adoption of its paid products and premium features. And Skype will continue to develop monetization models and revenue streams for its user base, and expects to grow revenue via marketing services (such as advertising) and licensing. Lastly, Skype will look to add more enterprise users to its user base.

Risk factors for the company include the fact that Skype has taken a loss in income in both 2009 and 2010 and may not achieve profitability in the next few years. Profitability, says Skype, will depend on the company’s ability to increase revenue, manage business costs, maintain tax positions and keep up with competitors (Skype specifically calls out Google has a growing competitor with Google Voice).

Article courtesy of TechCrunch

Professional social network LinkedIn has just submitted its S-1 filing with the SEC, indicating that it will file for a public offering. The maximum proposed total offering price is $175 million but this is just a placeholder amount. The company also announced the filing on its blog.

In terms of revenue, in the nine months ended September 30, 2010, LinkedIn’s net revenue increased $80.6 million to $161 million from the same period in 2009. Net income for the first nine months of 2010 came in at $10 million.

LinkedIn’s total net revenue in 2009 was $120 million, which LinkedIn obviously surpassed in 2010. The company took a $3.9 million loss in terms of net income, with 2010 as the first profitable year for the network. As of September 30, 2010, has $89.6 million in cash. The company currently has 990 employees and over 90 million members.

Other interesting things to note from the filing, with regard to LinkedIn’s risks:

“We expect our revenue growth rate to decline, and as we continue to invest for future growth, we do not expect to be profitable on a GAAP basis in 2011.”

“The number of our registered members is higher than the number of actual members, and a substantial majority of our page views are generated by a minority of our members… If the number of our actual members does not meet our expectations or we are unable to increase the breadth and frequency of our visiting members, then our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline.”

In terms of competition, LinkedIn says this in the document:

Other companies such as Facebook, Google, Microsoft and Twitter could develop competing solutions or partner with third parties to offer such products. We face competition from a number of smaller companies in international markets, such as Xing in Germany and Viadeo in France, that provide online professional networking solutions, as well as Internet companies in the customer relationship management market, such as Salesforce.com (Chatter and Jigsaw).

Updating

Article courtesy of TechCrunch

Microsoft wants to call their app store an App Store, but Apple thinks different. The term, used by Apple for almost as long as the iPhone has been around, is a registered Apple trademark. Microsoft, on the other hand, finds the term “app store” to be completely generic and not subject to trademark control.

From the filing:

“Any secondary meaning or fame Apple has in ‘App Store’ is de facto secondary meaning that cannot convert the generic term ‘app store’ into a protectable trademark,” write lawyers for Microsoft in a motion for summary judgment, filed yesterday with the Trademark Trial and Appeal Board. “Apple cannot block competitors from using a generic name. ‘App store’ is generic and therefore in the public domain and free for all competitors to use.”

Read more…

Article courtesy of TechCrunch