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From: zax4/24/2012 6:22:09 PM
   of 1822
 
Facebook deals may add week to IPO timing: source



The Facebook logo is shown at Facebook headquarters in Palo Alto, California May 26, 2010.
Credit: Reuters/Robert Galbraith

By Alistair Barr

reuters.com

SAN FRANCISCO | Tue Apr 24, 2012 4:07pm EDT

SAN FRANCISCO (Reuters) - A recent acquisition spurt by Facebook Inc may add about a week to the social network's journey to public markets, a source familiar with the situation said on Tuesday.

Facebook recently agreed to buy photo-sharing start-up Instagram for about $1 billion and on Monday the company said it would pay $550 million for hundreds of patents from Microsoft Corp.

The deals came weeks before Facebook was expected to enter the final stages of what will likely be the largest Silicon Valley initial public offering ever. The company has been aiming for an IPO sometime in May, with a roadshow typically taking about two weeks before the stock market debut.

Facebook's recent acquisitions will likely add about a week to the timetable because the company will have to discuss the impact of these events with the Securities and Exchange Commission, the source said.

The deals are likely not material, which means Facebook will probably not have to answer SEC questions through a new regulatory filing, which would have taken more time, the source added. The person did not want to be identified because they are not authorized to speak publicly about the IPO.

A spokesman for Facebook declined to comment.

An SEC spokeswoman declined to comment. The SEC's Corporation Finance division is currently reviewing Facebook's IPO filing and the regulator must declare the document effective before Facebook may begin selling shares.

Facebook management was aiming to launch a roadshow as early as May 7 and the start of trading late the week of May 14. But now Facebook is more likely to start the roadshow May 14, or even at the end of that month, CNBC reported earlier on Tuesday.

That would likely delay Facebook's stock market debut until early or mid-June. That is because the Memorial Day holiday, which is May 28, will likely mean that the stock market is less liquid and less hospitable to a new issue like Facebook, CNBC said.

(Reporting By Alistair Barr; editing by Gunna Dickson)

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To: zax who wrote (257)4/24/2012 6:32:02 PM
From: Glenn Petersen
   of 1822
 
I am not concerned about the delay. Summary details for the two acquisitions were disclosed in the last amendment. The SEC may want FB to expand the disclosures. There does not appear to be anything complicated about the Instagram acquisition. The acquisition of the patents may be a bit more complicated, particularly because it may impact the litigation.

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To: zax who wrote (246)4/25/2012 12:12:19 AM
From: Glenn Petersen
1 Recommendation   of 1822
 
Re: The coolest thing about the MS sale of AOL's Netscape patents to fb, is that they are now in the loving arms of their original owner... Marc Andreesen

Some perspective for those with short memories:

Facebook Reunites Netscape and Marc Andreessen

By David Benoit
Wall Street Journal
April 23, 2012, 6:20 PM

Netscape, long ago lost in AOL’s sea, is back in familiar territory.

The defunct web-browsing pioneer’s patents are among those purchased today by Facebook, after they spent a two week pit-stop at Netscape nemesis Microsoft.

That Microsoft bought the shell of Netscape when it purchased 800 patents from AOL was weird enough. Netscape was the biggest fly in Microsoft’s eye during its anti-trust battles.

But now that Facebook has bought the patents, they are back near the safe hands of Marc Andreessen’s, the co-founder of Netscape.

Andreessen made his fortune on Netscape and is now a dean among the young pups of the Tech 2.0 rise, most notably Facebook CEO Mark Zuckerberg. The venture capitalist has been on Facebook’s board since 2008 and his fund, Andreessen Horowitz, is in for a windfall from the upcoming Facebook IPO.

AOL scooped up Netscape in 1998 for about $4 billion. In an odd parallel to Facebook’s deal today, in 1998 it was AOL who looked to be the future and was scooping up the remains of a fallen pioneer. (WSJ referred to AOL as the “ Ascendant AOL” at the time.)

Netscape — or at least its remnants — isn’t the only company with an Andreessen connection to come under Facebook’s control recently.

Andreessen will be getting additional shares of Facebook as part of the company’s $1 billion purchase of Instagram, which Andreessen Horowitz had invested in. Andreessen already owned some 6.6 million class B shares of Facebook and a footnote in Facebook’s filing today mentions that doesn’t include his portion of Instagram’s 23 million Facebook shares.

blogs.wsj.com

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To: J.F. Sebastian who wrote (249)4/25/2012 11:33:39 AM
From: richieb
   of 1822
 
No worries JF ... we all make errors. cheers :)

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From: FUBHO4/25/2012 3:53:02 PM
2 Recommendations   of 1822
 




Posted on Tue, Apr. 24, 2012
In Cuba, young people long for a way to access FacebookBy Franco Ordonez
McClatchy Newspapers

miamiherald.com


The 24-year-old volunteer shows off the seven computers sitting on wooden desks under a painting of Saint Juan Bosco in a small, 6- by 10-foot cement room at the back of the church.Adalberto Malagon has taken several classes here. He learned how to write book reports on Word and crop photos using Photoshop. But what he really wants to learn is how to surf the Web.

Like many young Cubans, Rojas is frustrated that he can’t access Facebook and Google like his peers around the world.

“We’re ready,” he said. “We have so much culture and education in Cuba. There are many Third World countries with much less culture and education than Cuba that have had the Internet for many years.”

That may not come for years. Cuba, with its authoritarian communist government in control of the Web, has the lowest Internet-penetration rate in the Western Hemisphere, with just 16 percent of its population online. Even earthquake ravaged Haiti, the hemisphere’s poorest country, has a higher percentage of its people on the Internet.

In Cuba, only government officials and foreigners can set up the Internet in their homes, and the vast majority of Cubans can’t afford the fees charged at tourist hotels, where an hour of Internet equals about a quarter of the average Cuban’s monthly salary.

“Think about it,” said David Gonzalez, 20, who sometimes sneaks onto the Internet at the hotel where his mother works. “For $5 an hour, it’s not worth it.”

Since taking over the presidency from his ailing brother Fidel, Raul Castro has moved to liberalize the country’s economy. He’s slowly introducing modern technology. In 2008, islanders first received the right to have private cellphones.

But the government has been more cautious with the World Wide Web. An undersea fiber-optic cable now connecting Cuba and Venezuela will increase the country’s bandwidth, but service has yet to begin.

The Cuban government is concerned about the online potential for dissent and social mobilization, according to experts such as William LeoGrande, a Latin America specialist and dean of the American University School of Public Affairs in Washington.

The government feels confident that it has control of the traditional dissident community, LeoGrande said, but it’s less familiar with the techniques of a new crop of younger dissidents who’ve been inspired by the revolutionaries who used social media to start anti-government movements across North Africa and the Middle East.

The most famous Cuban blogger using social media to foment dissent is Yoani Sanchez, who publishes "Generation Y," which is translated into 16 languages. She sends out regular tweets about activism and her life on the island using text messaging from her cellphone. She has nearly 250,000 Twitter followers. She posts regularly each day.

“It’s possible that I don’t get there, that I don’t have enough health or life, please tell the youth of the future that their irreverence is welcome,” she recently wrote on Twitter.

Opponents call her a fraud and an agent in the United States’ political and economic war against Cuba.

The greatest challenge bloggers like Sanchez face isn’t censorship, but getting online. Despite the restrictions, she and others bloggers are finding new ways to broadcast their reporting, by saving posts onto flash drives and sharing them to friends with access to the Internet.

In 2007, Ramiro Valdes, then the interior minister, called the Internet “one of the mechanisms of global extermination,” but he added that it was necessary for continued economic development.

“This concern is exactly why Alan Gross is sitting in prison,” LeoGrande said.

Gross, an American from suburban Washington, was arrested and accused of being a spy two years ago for bringing satellite phones, laptops and Blackberry cellphones onto the island. Gross worked under the umbrella of a pro-democracy project of the State Department’s U.S. Agency for International Development. He said he was bringing the equipment to the island’s Jewish community, but he was accused of trying to subvert the government.

The island does have a limited intranet service that is more widely available. Cubans can surf local sites and open email accounts.

Yaremis Guerra, 18, takes classes twice a week at the Youth Computer Club near her home outside Havana, where she looks up music sites and exchanges emails with cousins in Texas.

“I get lost in that world,” Guerra said.

Jakeline Diaz, 25, has access to email through work at a local hospital near Pinar del Rio. But she really longs to get on Facebook. A colleague recently returned from a medical mission in Angola, where she had access to the Web and created a Facebook page.

“She has a lot of friends,” Diaz said. “She puts up photos. I’d love to have friends from around the world.”

On a recent afternoon, Gonzalez was walking with two friends through Old Havana to watch a televised soccer match that he’d learned about on the Internet at his mother’s hotel. Since traveling outside the country isn’t an option, the Internet is the best way to learn about the outside world, he said. If you asked every young person, he said, they’d tell you their first or second desire is to be able to have more access to the Web.

“No one has the Internet,” he said. “Not the young people. Not the old people. Really the only people who have the Internet are the people with power.”



Read more here: miamiherald.com



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From: Glenn Petersen4/25/2012 10:50:00 PM
1 Recommendation   of 1822
 
The real reason Facebook’s IPO will be delayed: 15-30% drop in new tech stocks

Jolie O'Dell
VentureBeat
April 25, 2012 1:27 PM

Facebook’s IPO was scheduled for May 2012, or so every analyst across the country was saying a couple months ago. However, that just ain’t gonna happen, and we’re here to tell you why.

No, it’s not because CEO Mark Zuckerberg is getting wishy-washy or touchy-feely about so-called distractions or his billion-dollar impulse buy of Instagram. It’s because right now is an absolutely awful time to bring any company onto the public market for an IPO.

Let’s follow the money, shall we? Here’s a graph we made showing the performance of six recently public technology stocks just over the last month:



As you can see, LinkedIn is the only one that isn’t outright losing, and it’s not even up one percent over where it was a month ago. The others have lost between 15 percent and 30 percent in value.

Looks pretty shaky, doesn’t it? But it’s not just the technology sector. Take a look at these common indices for overall market health, again showing performance over a one-month time period:



Again, you can see that things aren’t looking great. The most stable indicator has gained less than one percent, and all other economic indicators have dropped over the past 30 days.

Now, if you take a look at the past year or the past three months, you see a very different picture. Here’s another chart we made to show the same economic indicators for the past half-year:



As you can see quite clearly from this lovely, colorful chart, the overall economy was rising very sharply between January and February. Overall economic indicators slowed somewhat in growth between February and March, but they really hit a rough patch in late March and early April.

If you lay Facebook’s financial decisions over that graph, the company’s timing and choices become obvious. On February 1, Facebook filed its S-1 with the SEC. At that time, the market was particularly robust, as you can see above. Now that growth has slowed and even declined, we’re hearing there might be a delay, and it makes total sense.

Unless the market overall and recently IPO’d stocks in the tech sector perk up drastically very soon, there’s almost no way we’re going to see a Facebook IPO as soon as May.

Analysts back up this assertion, as well. Dun & Bradstreet tech IPO specialist Lee Simmons told us in a recent interview we should watch the market for cues as to when Facebook stock will land on the public market. If the market looked choppy, he said we should expect a delay.

“You saw a couple companies last year pull in the reins and delay the IPO,” Simmons said. “Facebook can do the same thing.”

In fact, during last August’s huge market shake-up, a record number of IPOs were delayed — the most IPO delays we’ve seen in a single week in more than a decade. And the delays happened for a good reason.

“Thinking back to last May when LinkedIn priced, it seemed like the public markets were going to be really robust for the rest of the year,” Simmons recalled. “Then everything tanked.”

As a result of the market’s mini-collapse last August, LinkedIn stock experienced some severe turbulence and still hasn’t fully recovered to its July 2011 high point:



So, if you’re just itching to buy some Facebook stock and are looking for signs of an impending IPO, keep your finger on the S&P 500 rather than the rumor mill. When making financial predictions, you’re always better off following the money than some random hunch you found on the Internet.

Top photo and image manipulation by Jolie O’Dell; charts created by O’Dell with help from YCharts.

http://venturebeat.com/2012/04/25/facebook-ipo-real-delay/

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From: Glenn Petersen4/25/2012 11:02:07 PM
   of 1822
 
Facebook Early Entry to Index Said Negotiating Point With Nasdaq

By Nina Mehta and Lu Wang
Bloomberg Businessweek
on April 25, 2012

Nasdaq OMX Group Inc. (NDAQ) ( NDAQ)’s waiting period for entry into one of its best-known stock indexes was a negotiating point with Facebook Inc. (FB) ( FB) as the company weighed where to list its shares, according to a person with direct knowledge of the matter.

The second-biggest U.S. stock exchange operator said on April 13 that it was shortening the so-called seasoning period before new companies are admitted to the Nasdaq-100 Index to three months from at least one year. Facebook confirmed this week it is listing on Nasdaq Stock Market. The social-networking website based in Menlo Park, California, filed to raise $5 billion in February.

Gaining entry to gauges tracked by investors is attractive to public companies because it provides a guaranteed shareholder base. Exchange-traded funds and other products linked to the Nasdaq-100 managed about $49.4 billion at the end of last year, according to data compiled by Nasdaq.

“The more liquidity support that the stock has, the better, in their view,” Perry Piazza, director of investment strategy at Contango Capital Advisors in San Francisco, who helps oversee about $3.3 billion, said in a telephone interview. Going into the Nasdaq-100 “would help the trading volume of Facebook dramatically,” he said.

A person with direct knowledge of the decision said April 5 that Facebook decided to list on Nasdaq. Eight days later, the New York-based exchange operator shortened the time a company must be listed on a “recognized market” before becoming eligible for the Nasdaq-100. It used to be at least two years, or one if a stock would be among the top 25 shares in the index by market value.

Picking Nasdaq

The rule change was implemented on April 23, the day Facebook disclosed in a regulatory filing that it picked Nasdaq over the New York Stock Exchange. The shift also applied to the Nasdaq Financial-100 Index and Nasdaq Biotechnology Index.

Facebook’s Jonathan Thaw, a spokesman, declined to comment. John Jacobs, executive vice president and head of the global index group at Nasdaq OMX, declined to comment on Facebook or any other company.

“It was very simply a housekeeping of index methodology,”Jacobs said in a phone interview. The exchange studied the benefits of shortening and lengthening the waiting time and decided that reducing the period “makes the index more relevant” by incorporating the biggest companies more rapidly, he said.

Listing Requirements

Annual changes to the Nasdaq-100, a gauge of non-financial companies, are announced in early December. Should a company fail to meet listing requirements at any time during the year, it is replaced by the Nasdaq-listed security with the highest market value, according to the exchange’s website.

Nasdaq lured Dallas-based Texas Instruments Inc. (TXN) ( TXN) from the NYSE in January, the biggest company ever to make the switch. Three months later, the world’s largest maker of analog semiconductors entered the Nasdaq-100.

The exchange has been fending off increasing competition from NYSE, which accounted for 57 percent of proceeds raised in equity offerings for technology companies last year and increased that to 67 percent this year through April 19, according to Ipreo Holdings LLC, a New York-based provider of markets data and analytics. The NYSE has claimed more than half of all IPOs every year starting in 2008, the firm said.

Tracking the Index ETFs and other products created to track the Nasdaq-100 must buy companies included in the measure to fulfill their mandate. Texas Instruments makes up 1.2 percent of the gauge, which serves as the basis for the PowerShares QQQ (QQQ) ( QQQ) Trust, the U.S. ETF with the fifth-highest average daily trading volume in 2012, according to data compiled by Bloomberg.

Membership in the index doesn’t guarantee a company will stick with Nasdaq. Teva Pharmaceutical Industries Ltd. (TEVA) ( TEVA), which makes up 1.06 percent of the measure, said in March that it’s leaving for the NYSE at the end of May.

The prospect of getting into the Nasdaq-100 may have prompted Facebook to choose Nasdaq over the NYSE, Josef Schuster, founder of Chicago-based Ipox Schuster LLP, said in a telephone interview. His firm has about $2 billion tied to indexes that track IPOs.

If Facebook gets an index weighting of 3 percent, the PowerShares QQQ “could create $2 billion of systematic demand”for the stock, he said. “It has to be bought, whether it’s high or low, cheap or expensive, so it’s strategically important.”

IPO Size Facebook may expand its IPO to as much as $10 billion, seeking a market value of $75 billion to $100 billion, people familiar with the plans have said. Only eight companies in the Nasdaq-100 have a market capitalization exceeding $100 billion, according to data compiled by Bloomberg.

Schuster said he’s not sure if his funds will own Facebook because the number of publicly available shares as a percentage of the total may be too low. The smaller IPO size, at the low end of that valuation range, would make 6.7 percent of Facebook shares publicly traded, while a larger sale would give it a float of 10 percent.

At that level, Facebook would join Internet companies such as Groupon Inc. and LinkedIn Corp. in boosting demand by floating less than the usual amount. In a typical offering, investors get shares representing closer to 20 percent of the company, according to Paul Deninger, a senior managing director at New York-based investment bank Evercore Partners Inc.

Technology Bets Traders use the Nasdaq-100 to bet on the technology industry, according to Leo Guzman, president of Guzman & Co. Computer-related stocks make up 68 percent of its value, according to data compiled by Bloomberg.

“The Nasdaq-100 is essentially a trading vehicle where a trader can gain derivative exposure to the technology markets,”Guzman, president of the broker in Coral Gables, Florida, said in a telephone interview. “Membership in the S&P 500, Russell 2000 and MSCI indexes enable you to get more long-term investors.”

More than $5.58 trillion was benchmarked to the Standard & Poor’s 500 Index, with $1.31 trillion directly linked to the index, at the end of 2010, according to S&P’s website.

Berkshire Hathaway Inc., billionaire Warren Buffett’s insurance and investment firm, was picked to join the S&P 500 in January 2010. Index funds may give Berkshire shares stability, Buffett told shareholders that month.

“You’ve got a permanent stockholder for 6 or 7 percent of your shares,” Buffett said at the time. “We like permanent shareholders. That’s exactly what we’re looking for.”

To contact the reporters on this story: Nina Mehta in New York at nmehta24@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

businessweek.com

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To: Glenn Petersen who wrote (262)4/26/2012 8:21:06 AM
From: Lahcim Leinad
   of 1822
 
Thanks for posting that! Spot on. I've been following all those failed IPOs. Facebook is going to be no exception. Best!

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From: Glenn Petersen4/27/2012 12:07:42 AM
2 Recommendations   of 1822
 
Nicely played by Kevin Systrom:

Revealed: How Twitter’s secret offer for Instagram made Facebook pay $1B

Jennifer Van Grove

VentureBeat
April 26, 2012 12:44 PM

The secret details of the $1 billion deal between Facebook and Instagram are more convoluted than anyone thought. VentureBeat has learned that Instagram chief executive and co-founder Kevin Systrom first got an offer and a term sheet from Twitter, then shrewdly doubled the value of his young company by striking a deal with Facebook.

On Monday, April 9, Facebook announced that it was buying photo-sharing sensation Instagram for $1 billion in cash and stock. The unexpected, mammoth deal was a shock to the Internet community, and to many of Instagram’s own investors — including new investors in a $50 million round of funding that closed prior to the buyout (Instagram has yet to confirm the round).

Additional reports have since woven together aspects of the dealings between Facebook’s CEO Mark Zuckerberg and Instagram’s Systrom. Those reports detailed that the two CEOs moved expeditiously and hammered out a weekend agreement between Friday, April 6 and Sunday, April 8.

But what has yet to come to light is the behind-the-scenes, three-way chess match between Instagram, Twitter, and Facebook, orchestrated and played masterfully by Systrom, that helped Instagram double its worth in just a few days and end up at its preferred destination.

A previous report suggested that Twitter was interested in buying Instagram, but talks were far more serious, according to multiple people knowledgeable with the deal. Systrom, while negotiating with Sequoia and Greylock on a round of funding, used that pending deal to pressure Twitter to make an offer, according to information shared by a reliable source. Twitter had expressed interest in buying the service but was moving slowly up to that point.

Twitter did make an offer during the financing process, prior to the round closing. The company, interested in doing more in the media space, felt that Instagram’s service was nicely aligned with Twitter’s business.

Twitter made a very real offer in the hundreds of millions of dollars range, according to two sources with knowledge of the deal. Twitter chairman Jack Dorsey, an early Instagram investor and a one-time avid photo-sharer, was said to be involved in all aspects of the deal. But Instagram shrewdly did not sign the term sheet, which would have bound it to a no-shop clause, and went ahead and closed its financing round.

This put Systrom in an odd — but useful — situation in which he had both the new funding and the Twitter offer still on the table. According to one source, Systrom went to Zuckerberg for a better deal and Zuckerberg bid just to block the Twitter deal.

But the negotiation process was far more nuanced than Systrom simply playing Twitter against Facebook to get a better deal, and Instagram’s choice to go with Facebook had more to do with product and vision alignment than price, a person familiar with the negotiations said.

Facebook had no comment on the deal.

How Instagram ended up at Facebook and not Twitter may not have involved any duplicitous or conniving acts on Systrom’s part, but the Twitter offer clearly gave him the confidence and strength of position to negotiate with the upper hand.

And while VentureBeat previously had it on good word that Facebook’s purchase of Instagram was directly tied to boosting the company’s position in photo-sharing and mobile realms prior to its IPO, we’ve heard that the primary reason Facebook bought Instagram originated from a much darker place: paranoia.

The buy, driven entirely by Zuckerberg, was made because Facebook’s CEO was petrified of Instagram becoming a Twitter-owned property.

Zuckerberg, we’re told, lives in perpetual anxiety, preoccupied by the fear of Facebook losing its place, terrified that youngsters will get their social networking fix from other services. That fear served as the catalyst behind his decision to buy Instagram and keep it out of the hands of a cross-town competitor.

This type of paranoia is relatively normal at Silicon Valley’s largest technology companies. “These huge West Coast companies, peopled mostly by kids who cannot believe their good luck, commonly turn paranoid and think everyone is out to get them,” veteran columnist and broadcaster John Dvorak told VentureBeat. “Microsoft was the worst but not the first. Apple acts this way with Android, and Google has been paranoid for a few years.”

Indeed. Paranoia is a way of life in Silicon Valley that dates back to the earliest days of Intel, as former Intel CEO Andy Grove detailed in his 1996 book Only the Paranoid Survive.

venturebeat.com

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From: Glenn Petersen4/27/2012 10:16:46 AM
   of 1822
 
Facebook's next patent push:

The top suspect Facebook is on a mission to arm itself with a powerful arsenal of patents, and it's surprising where the next set of patents may come from.


by Paul Sloan
CNET
April 26, 2012 3:20 PM PDT

When Yahoo filed its sweeping patent lawsuit against Facebook, claiming that Facebook essentially built its social network on the back of Yahoo's intellectual property, Mark Zuckerberg took little time to take up arms.

In just over a month, Facebook has snapped up more than 1,400 patents -- 750 from IBM in March, and on Monday, 650 from Microsoft. It's all a swift attempt to bolster its position against Yahoo and to amass a war chest to scare off others looking to sue a company whose pockets will grow ever deeper once it goes public.

And based on a statement from Facebook's general counsel after this week's patent deal with Microsoft -- saying it was part of "our ongoing process of building an intellectual property portfolio" -- Facebook is far from done.

So the question now: Whose patents will Facebook try to buy next?

I asked Erin-Michael Gill just that. He's the chief intellectual property officer for MDB Capital, an investment bank that specializes in analyzing and valuing the IP of both public and private companies. Gill has a strong track record. After he assessed Yahoo's patent portfolio last fall for hedge fund manager Daniel Loeb, who was building a stake in Yahoo, Gill predicted that Yahoo would end up suing Facebook over patent infringement.

Now Gill is concluding that the next deal Facebook is likely to try strike could well be with Sony, which is one of the 10 largest patent holders in the world and, given its current problems, might be eager to sell.

First, let's look at Facebook's patent strategy, which has shifted with lightening speed. The company has been hit with scores of small patent suits over the past several years and, fully aware of the importance of patents for any successful tech company, quietly began building a small patent portfolio through acquisitions.

It picked up some key patents along the way, such as a broad one that it bought from Hewlett-Packard in 2010 that covers an "apparatus and method for communication between multiple browsers." But it took the assault from Yahoo -- launched as Facebook nears its IPO -- to trigger its major shopping spree, not to mention its countersuit against Yahoo.

Both of Facebook's big patent purchases, according to Gill, were done in part because some of the patents touch on areas of Yahoo's operations and products. That's especially true of this week's purchase. Those are patents that Microsoft, just two weeks earlier, bought from AOL and, as such, date back to some early innovations. (According to Bloomberg, the original Microsoft-AOL deal was actually done with the intent of then selling off some of the patents to Facebook.)

In fact, the AOL patents hit Yahoo -- as well as Facebook and Microsoft nemesis Google, for that matter -- front and center, reportedly covering aspects of e-mail, instant messaging, Web browsing, search, and Internet advertising. No wonder Facebook paid $550 million -- almost seven times more than it did for the bigger batch of IBM patents, for which it ponied up $83 million-- according to its latest S-1 filed with the Securities and Exchange Commission.

"Facebook needs to solve their Yahoo problem," said Gill, "which is why it's acquiring assets applicable to Yahoo."

So when I asked Gill whose patents Facebook might go after, he started by pinpointing which companies hold patents that Yahoo cites the most often in its own patents, something that patent applicants are required to do when there are similarities to existing patents.

While the list includes several would-be sellers, his data and reasoning kept pointing to Sony. Gill found that more than 10 percent of Yahoo's patent portfolio explicitly cites one or more of Sony patents, indicating that Sony has plenty of patents that would be important to Yahoo -- and, hence, desirable for Facebook.

Below is a snapshot of the top 10 like companies that cite Yahoo patents most (it includes Yahoo because some Yahoo patents cite other Yahoo patents). Scratch out companies that Facebook has already done deals with, and those are less inclined to sell big portfolios to Facebook, such as Google or Oracle, and Gill quickly lands on Sony (although Facebook could pick up some more from Hewlett-Packard).


Here's whose patents Yahoo cites the most
____________________

Gill scanned through a number of Sony patents and found plenty would appeal to Facebook, especially as its business evolves. There's one, for instance, that was granted in 1999, and covers a " method for displaying on a screen or computer system images representing search results." In short, it's a powerful patent that pertains to optimizing search results. And he found another, granted in 2003, that covers systems for displaying interactive video -- also what Gill interprets as a potent patent.

Best of all, Sony is a mess. Earlier this month, Sony doubled its projected loss for the past financial year to $6.4 billion, its worst loss ever. The company, a shadow of its former self, is in the midst of massive upheaval, which is exactly the time it looks to sell assets to raise cash. Of course, even if Facebook does try to go this route, Sony could rebuff the offer or chose to do something entirely different with its rich patent trove.

A Sony spokeswoman declined to comment.

A Facebook spokesman also wouldn't comment about its patent strategy, and instead pointed to the statement from its general counsel, Ted Ullyot, suggesting that Facebook is going to keep on building out its patent portfolio.

The most strategic portfolio Facebook could buy, of course, would be Yahoo's -- and that's a scenario Gill laid out for me after Yahoo first filed suit against Facebook. So far, though, Zuckerberg has been doing the next best thing -- buying up portfolios that touch Yahoo's patents; in effect, circling its prey.

He's certainly got Silicon Valley on his side. Plenty of prominent tech players have expressed outrage at the litigious Yahoo, and are instead rooting for the brash 27-year-old Zuck, who, for his part, seems determined not to let Yahoo shake him down.

And why not? A blockbuster IPO from Facebook could lift plenty of boats.

news.cnet.com

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