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Facebook has filed yet another amendment to its S-1 filing in the run-up to its IPO widely expected for mid-May. There aren't many significant changes otherwise as its updated filing references Yahoo's patent infringement lawsuit as a potential risk factor and has also mentions some other legal proceedings it is currently involved in. [1]
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In the new filing, the company stated:
"We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming, and, if resolved adversely, could have a significant impact on our business, financial condition, or results of operations.
We are involved in numerous class action lawsuits and other litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our business, financial condition, or results of operations."
Facebook was recently sued by Yahoo for infringing 10 of its patents. It was also sued by an enterprise IT company based in Canada, and some speculate that AOL is looking to jump on the legal bandwagon.
The threats may only increase as the IPO nears as companies look to either get juicy settlements right before the IPO or at least slowdown the oozing enthusiasm for Facebook's public debut. Though Facebook has acquired more than 750 patents from IBM to beef up its defenses against such lawsuits, these may weigh on the company's profitability in the coming years if Facebook is ruled to have infringed on them and is ordered to pay damages and licensing fees. Right not we are not factoring this into our assumptions for Facebook.
We currently have a $82 billion valuation for Facebook based on the discounted cash flow valuation of its advertising and virtual good transactions businesses. It is expected to raise at least $5 billion at a speculated $100 billion valuation for its upcoming IPO.
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Notes:
- Facebook?s New S-1: An ?Unfavorable Outcome? In The Yahoo Patent Lawsuit ?Could Be Material To Our Business?, Techcrunch [↩]
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