If you’re interested you can read the entire Registration Statement or Facebook IPO Prospectus by clicking here.

I (They) don’t know how they will create long term, sustainable revenues

The anecdotal evidence from all the young people I speak to is that Facebook has peaked in terms of its utility.  They have penetrated almost 1 Billion souls, and one has to wonder where growth comes from once we are all signed on?

Selling points on Zynga did earn them a few billion in high-margin revenue last year, but how much runway does this category have?  If Facebook makes ads more prevalent, they will destroy what makes it cool. I can’t see them doing that.  Add to that the danger of ad revenues decreasing, and the picture is even bleaker.  See http://venturebeat.com/2012/05/15/general-motors-unfriends-facebook-says-report/

Overpriced

It appears that the Trailing P/E of the offering will be about 70 or 80.  Google’s is 19 and Apple’s is about 15 today.  They are both companies with lots of growth potential ahead of them.  For an investor to do well on the Facebook IPO, Mark Zuckerberg and company will have to show some exceptional wizardry when it comes to growing earnings.

It’s hard to stay on top

Just ask Yahoo, MySpace, Friendster and myriad others.  The threats to Facebook are huge.  They admit they are having difficulty figuring out how to make mobile make money, and increasingly that’s how people access the network.  There will likely be lots of opportunity for the IPO investor to get out with a profit.  No doubt the first day will bring furious trading as people like me (who can’t get in on the IPO) scramble in the open market to buy shares.  But at the end of the day either the company will have to perform, and get earnings into the 10′s of billions, or the stock price is doomed to drop.

“One of the very difficult parts of the decision I made on the financial crisis was to use hardworking people’s money to help prevent there to be a crisis.”

“I’ve abandoned free market principles to save the free market system.”
(Dontcha just love that logic!)

“I want to share with you an interesting program — for two reasons, one, it’s interesting, and two, my wife thought of it — or has actually been involved with it; she didn’t think of it. But she thought of it for this speech.”

“I didn’t grow up in the ocean — as a matter of fact — near the ocean — I grew up in the desert. Therefore, it was a pleasant contrast to see the ocean. And I particularly like it when I’m fishing.” (Uh… Ok, George!)

“And they have no disregard for human life.”
(On the brutality of Afghan fighters)

“I remember meeting a mother of a child who was abducted by the North Koreans right here in the Oval Office.”

“Let’s make sure that there is certainty during uncertain times in our economy.”

“And so, General, I want to thank you for your service. And I appreciate the fact that you really snatched defeat out of the jaws of those who are trying to defeat us in Iraq.” To Army Gen. Ray Odierno, Washington, D.C., March 3, 2008

”It is clear our nation is reliant upon big foreign oil. More and more of our imports come from overseas.”

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”

“I know the human being and fish can coexist peacefully.”

“I’m hopeful. I know there is a lot of ambition in Washington, obviously. But I hope the ambitious realize that they are more likely to succeed with success as opposed to failure.”

“Neither in French nor in English nor in Mexican.” (declining to answer reporters’ questions at the Summit of the Americas, Quebec City, April 2001)

“Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.”

“Too many good docs are getting out of the business. Too many OB-GYNs aren’t able to practice their love with women all across this country.”

“They misunderestimated me.”

“I’m the commander — see, I don’t need to explain — I do not need to explain why I say things. That’s the interesting thing about being president.”

“For every fatal shooting, there were roughly three non-fatal shootings. And, folks, this is unacceptable in America. It’s just unacceptable. And we’re going to do something about it.” (Pssst. George! I think your plan is working…)

“I would say the best moment of all was when I caught a 7.5 pound largemouth bass in my lake.” (on his best moment in office, interview with the German newspaper Bild am Sonntag, May 7, 2006)

Here is Sean Wise, Ryerson University colleague, in an excellent video for entrepreneurs or anyone thinking of going after money in a startup.  It doesn’t have to be big money with Venture Capitalists or Angels.  Think about these things even if you’re asking a close friend or family member for a small startup investment.  They’re still a good filter, even though you might be getting the money partly for love!

As Sean’s video points out, a good elevator pitch has to have the following four characteristics:

Succinct – These folks are busy busy busy so you need to catch their attention fast.  If you’re pitching serious money, you need to think the time it takes to ride an elevator in a Wall or Bay Street office tower.  That’s what you’ve got.  Maybe 2-3 minutes tops, and sometimes your first sixty seconds will kill your pitch, if you don’t pay attention to every detail.

Easy to Understand – tell me like I’m five! Explain what pain point your are solving, and how your solutions solves it better than anything else.  Here is an excellent article from The Entrepreneur Network, about how to tell if your idea really is a good opportunity.

Greed Inducing – you need to show how your pitch will make money for investors.  Not just the amount, but how will your idea/firm turn the opportunity into profits.  If you have an unfair advantage, now is not the time to hide it.

Irrefutable – can’t leave a lot of questions in their mind.

If you can pass these tests, your idea has a chance of at least being considered.

Beginning on July 1 of this year, Apple will pay a quarterly dividend of $2.65 per share.  This works out to just about 2% for a dividend yield (at current prices), and is a very respectable dividend from a company that also consistently delivers growth.  On top of sharing cash with us shareholders by way of a dividend, they are also announcing a $10 billion share repurchase program starting in the fall.  The plan, according to Apple, is to spend $45 billion over the next three years.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” Tim Cook, Apple’s CEO, said in a statement today. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

Apparently they will have to use only their US-based cash for these programs.  The reason, according to Apple CFO Peter Oppenheimer, “Repatriating the cash from offshore would result in significant tax consequences under current U.S. laws”.

Apple shares were up about 1% from last Friday’s close at the time of this post.

Here’s the story.  March 11, 1974. A big hollywood crowd has come out to see the Smothers Brothers at Los Angeles’s Troubador club.  Tommy in particular is working out the kinks in his new act after some time off from performing.   In the crowd are Paul Newman, Peter Lawford and John Lennon’s party which included Harry Nilsson, and B-Movie actress Pam Grier who was part of his 18 month “Lost Weekend” with May Pang.

As usual for this period, Lennon, Nilsson, and their entourage are trashed, and they begin ruthlessly heckling Tommy.  Nilsson was the bigger culprit, having been misled by Lennon into thinking that Smothers actually liked it! Eventually they are thrown out, and to top off the night, Lennon allegedly hit a photographer.

What is less well known is that Lennon sent this note, accompanied by flowers, to Pam Grier the following day. Apparently, they had just met that evening, and while not really a part of the ruckus, she was kicked out of the club just for being part of his group.

I love the last part, “thank you for not hitting me”!

Thanks to Q107′s Joanne Wilder for reminding me about this story.

[I'm "reprinting" this article from Frank DeLisio, a business valuation specialist from Toronto, Ontario. His company is Alexar Consulting Inc.]

Best Ownership

A standard for evaluating entrepreneurial performance

By Frank De Lisio, CA, CBV

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

That is the unnecessary part.

But the misinformed, arbitrary nature of this law is what literally drives me to distraction, forgive the pun.

According the the Ontario government’s website:

the distracted driving law makes it illegal for drivers to talk, text, type, dial or email using hand-held cell phones and other hand-held communications and entertainment devices. Hands-free use of these devices is permitted. The new law also prohibits the viewing of display screens unrelated to driving such as laptop computers or DVD players.  Police, paramedics and firefighters, as well as some commercial drivers and public service workers may continue to use certain hand-held devices when performing their duties. All drivers may use hand-held devices to call 9-1-1.

So now if i make a call and use the handsfree function, it’s a legal call (Well…. technically not the dialing part, but the government seems to just forget about that, as very few of us have voice recognition, and no one on the planet has voice recognition that actually works).  Now.  If I use that handsfree function, AND have the phone in my hand (not to my ear mind you, just in my hand), I’m breaking the law, even if it’s in a hand that’s also on the wheel.  However, if I use that handsfree function, AND have a cigarette package in my hand, I’m not breaking the law.  It appears that the only thing that you can’t hold in your hand while using it’s handsfree function is the phone itself.  You can hold your spouse’s hand, your lunch, a tennis ball, or even a dried newt in your hand while using the handsfree function on your phone, but DON”T YOU DARE touch that phone!  Totally arbitrary, and thus unsupportable in my humble opinion.

That is why this law, in my humble opinion, is an ass, and has to go.

The second part of this is the exemption for police, fire etc.  I’m sorry but they don’t receive any special driving training other than high speed chase training.  They are absolutely NOT in any way more qualified to do two things at once than I or anyone else.  Have you ever BEEN in a modern transport truck.  There are a lot of things to look after.  They seem to do fine.  Why can’t a phone be one of them??

I’m tired of the government poking their noses in our lives.  There is a law to cover those who cause a crash while using their phone.  I’m fine with that if the phone was a contributor.  This new law was not necessary, is an infringement on my freedom and I will fight it if ever charged.

Neil Young has taken his campaign for higher-fidelity digital sound to the stage of a technology conference.

By Ryan Nakashima
Associated Press
Feb 02, 2012
DANA POINT, CALIF. — Legendary rocker Neil Young took his campaign for higher-fidelity digital sound to the stage of a technology conference Tuesday, saying a giant of the industry was on his side: the late Steve Jobs.

Young said the Apple co-founder was such a fan of music that he didn’t use his iPod and its digitally compressed files at home. Instead, he used a physical format well-known to have better sound.

“Steve Jobs was a pioneer of digital music. His legacy is tremendous,” Young said. “But when he went home, he listened to vinyl (albums).”

Young told the “D: Dive Into Media” conference Tuesday that he spoke with Jobs about creating a format that has 20 times the fidelity of files in the most current digital formats, including MP3.

Such a format, he said, would contain 100 per cent of the data of music as it is created in a studio, as opposed to 5 per cent in compressed formats including Apple’s AAC. Each song would be huge, and a new storage and playback device might only hold 30 albums. Each song would take about 30 minutes to download, which is fine if you leave your device on overnight, he said.

“Sleep well. Wake up in the morning. Play some real music and listen to the joy of 100 per cent of the sound of music,” he said.

Although Young didn’t have a practical plan for developing such a format — saying it’s for “rich people” to decide — he said Jobs was on board with the idea before he died from cancer at age 56 in October.

“I talked to Steve about it. We were working on it,” Young said. “You’ve got to believe if he lived long enough he would eventually try to do what I’m trying to do.”

Young’s opinion of Jobs was confirmed by interviewer Walt Mossberg, a journalist with News Corp.’s All Things D website, which has hosted Jobs at its conferences before.

Mossberg said Jobs in the past expressed surprise that “people traded quality, to the extent they had, for convenience or price.”

Young, a 66-year-old singer and songwriter, was full of other surprising opinions, including his defense of recording labels such as his own Reprise Records, a unit of Warner Music Group Corp., as being a nurturer of artists, even as he said recording companies had botched the transition to digital music.

Young also said that “piracy is the new radio,” suggesting that illegally copying low-quality songs was an acceptable way for fans to sample music before buying higher-quality versions.