Friday, May 25, 2012

Knighted Jony Ive: current project is Apple's most important and best work yet


Ive was in England this week where he was knighted for “services to design and enterprise.” During the Brit’s visit, he spoke with The Telegraph in a lengthy interview where he was asked if he had to be remembered for just one product, which one would it be.
After a long pause, Ive told the reporter that what Apple is working on right now feels like the most important and the best work they have done. Of course, he can’t reveal what said product is so it’s a sheer guessing game at this point. Possible products could include the new iPhone, the next iPad or even the long-rumored Apple TV.
Ive further elaborates that a large number of products ultimately remain hidden away behind Apple’s walls. He says that it’s often unclear during a project if they will be able to overcome hurdles and create something that lives up to Apple standards. Challenges of this nature happened with the iPod, iPhone and the iPad.
But one of the toughest aspects of his job is not in the design phase but knowing when to walk away from a prototype.
"And there have been times when we've been working on a program and when we are at a very mature stage and we do have solutions and you have that sinking feeling because you're trying to articulate the values to yourself and to others just a little bit too loudly,” Ive said. “And you have that sinking feeling that the fact that you are having to articulate the value and persuade other people is probably indicative of the fact that actually it's not good enough. On a number of occasions we've actually all been honest with ourselves and said 'you know, this isn't good enough, we need to stop'. And that's very difficult."
apple, iphone, ipad, apple tv, jony i

Wednesday, May 23, 2012

Just how many shares Mark Zuckerberg and Peter Thiel sold on May 18?

Facebook Inc. Chief Executive Mark Zuckerberg has sold 30.2 million shares and director Peter Thiel has sold 16.8 million shares of the social-networking company, according to securities filings published late Tuesday. The sales confirm plans detailed in a prospectus before Friday's $16 billion IPO. Zuckerberg sold 30.2 million shares at a price of $37.58 for gross proceeds of $1.13 billion; Thiel sold 16.8 million shares for gross proceeds of $633 million. Facebook insiders had told prospective shareholders of their plans in an S-1 filing last week.

Monday, May 21, 2012

FaceBook IPO: push the price and pull the money

On May 16:


Facebook pushed the price up to convince the early investors to sell more shares. Insiders and early Facebook investors will be unloading more of their shares in the initial public offering, the company said Wednesday, as they take advantage of investor demand.
    
Facebook said in a regulatory filing that 84 million shares, worth up to $3.2 billion, will be added to the offering.
    
The entire increase comes from insiders and early investors, so the company won't benefit from the additional sales.
    
The biggest increases come from investment firms DST Global and Tiger Global. Goldman Sachs is doubling the number of shares it is selling. Facebook board members Peter Thiel and James Breyer are also selling more shares.
    
Founder Mark Zuckerberg isn't increasing the number of shares he's selling.
    
The news comes a day after Facebook raised the expected price range for the stock to a range of $34 to $38 per share, up from its previous range of $28 to $35. Also Tuesday, major advertiser General Motors Co. said it would stop advertising on Facebook.
    
At the high end of the price range, the IPO would raise $16 billion without the overallotment option reserved to meet extra demand. That would make it the third-largest U.S. IPO in history, ahead of General Motors in 2010, according to Renaissance Capital.
    
The IPO is the most hotly anticipated in years and would value Facebook overall at more than $100 billion.
    
In a filing with the Securities and Exchange Commission, Facebook said current shareholders are now offering approximately 241 million shares, up from about 157 million shares previously.
    
Even though Zuckerberg isn't increasing the number of shares he is selling, the additional sales will trim his voting control to 55.8 percent from 57.3 percent. That's because he has voting control over some shares now owned by investment firms, which will be sold in the offering.
    
On May 18:
What does this tell you?
The key facts are that 43mm shares of Facebook changed hands at $38.00, almost all of them at the bid, and another 28.5mm traded at $38.01, largely at the ask.* I am not really smart enough to interpret – humans and algorithms aware of the stabilizing bid may have thrown in their own bids at $38-even – but my best guess would be that the underwriters have eaten through half or so of the 63mm share Facebook greenshoe in stabilizing the deal at just about $38. So I seem to have lost myimaginary bet that the greenshoe would be exercised in full.
The greenshoe and stabilization are weirdly misunderstood; people cannot get over the idea that it is a prop position for the underwriters, meaning that if the stock reached $50 the underwriters would make a kajillion dollars on their 63mm share greenshoe option, while if instead it breaks through $38 in the wrong direction the underwriters would be long a lot of stock at $38. Nah. Morgan Stanley et al. sold 484mm shares for $38.00 last night, but only bought 421mm from Facebook. That left them with a 63mm short that they were hoping to cover at $37.582 (the price of the IPO and greenshoe to them) but that it sure looks like they’ve mostly covered at $38.00 – $38.01 today.
There are scenarios where the greenshoe and attendant stabilizing can be a prop winner or loser for the underwriters, where for instance they do some stabilizing below the IPO price (buying in their short below where they sold it), or where they use their own money to stabilize while holding some greenshoe firepower in reserve, hoping that the stock will recover and they’ll make money on the prop bet while still being able to exercise the greenshoe. That may have happened here. But in general greenshoes are a nice illustration of banks being long-term greedy, trading the greenshoe on behalf of clients rather than lining their own pockets – which, here, would have involved allowing the stock to break the IPO price and then buying with a $37 handle to cover the greenshoe.
The real prop winners or losers on the greenshoe, though, are the people who signed up to sell into it(page 146): VCs and early insiders like Peter Thiel, Dustin Moskovitz, Sean Parker, Accel Partners and DST, all of whom are missing out on multi-hundred-million-dollar sales and will have to take their chances when their lockups expire in 3-12 months. Given the somewhat scraggly performance of the IPO, they may regret missing the chance to sell now at $38, though they can console themselves with the stupefying amounts of money they made on the shares they did sell (page 141).
For the underwriters, this still looks pretty much like an agency trade, one in which they made $176mm though the chances of clipping the extra $26mm on the greenshoe seems remote. Here’s the split among the top underwriters:
So they’re doing okay. Not entirely to be scoffed at is the fact that, besides placing the stock, they get to trade at least some of it – maybe not quite the way they’d hoped, but still. Those volume numbers above represent a record for an IPO, and mean that each Facebook share outstanding changed hands on average about one and a half times today.** If you take the 573mm shares that traded and assume (unjustifiably but whatever) that average revenues for these trades are 1.5 cents per share, you get about $8.6mm in Street-wide trading revenue for Facebook today – about one-sixth of the way to what SecondMarket made on Facebook in four years. Public equity trading may be a crappy business, but they make it up in volume.
The biggest loser, though, may be Nasdaq, whose hiccups earlier today seem to have sparked an SEC investigation, as all hiccups do. Even worse, they may have taken Nasdaq out of the running for a BATS listing. Because if you can’t execute the biggest IPO you’ve ever done, you … wait … never mind.