Facebook, and Zuckerberg, embark on mega-IPO

Facebook took the first step toward public markets in the year's most highly anticipated IPO, which could rank co-founder Mark Zuckerberg among the world's richest people.

The world's largest social network, a dorm room project for Harvard dropout Mark Zuckerberg that exploded in popularity and vaulted to Silicon Valley's top tier within 8 years, is expected to make its market debut in the middle of the year. It could raise much more than the $5 billion initially targeted, and value Facebook at up to $100 billion.

The company, which some investors fear may have peaked in terms of growth, now has 845 million users. Revenue in 2011 was $3.71 billion, up 88 percent from the previous year but at the low end of expectations. Net income rose 65 percent to $1 billion.

The long-awaited filing on Wednesday for an initial public offering kicks off a months-long process that will culminate in Silicon Valley's biggest coming-out party since the heyday of the dotcom boom and bust.

Facebook appointed Morgan Stanley, Goldman Sachs and JPMorgan its lead underwriters. Other bookrunners included Bank of America Merrill Lynch, Barclays Capital and Allen & Co.

"We often talk about inventions like the printing press and the television," Zuckerberg said in a letter accompanying the documents. "Today, our society has reached another tipping point."

"There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future," said Zuckerberg, whose $500,000 base salary will drop to a dollar from January1 2013.

"The scale of the technology and infrastructure that must be built is unprecedented."

Zuckerberg's 533.8 million shares are worth

almost $16 billion , based on a per-share value of $29.76 that the company assigned to its restricted stock units on December 31.

DOTCOM MANIA?

Facebook had previously been expected to raise $10 billion in what would have been the fourth-largest IPO in U.S. history, after Visa Inc, General Motors, and AT&T Wireless, according to Thomson Reuters data.

The $5 billion figure in Wednesday's prospectus was an initial figure and could change based on investor demand.

The prospectus underscored how 85 percent of Facebook's 2011 revenue was derived from advertising. Last year, social-gaming company Zynga, creator of Farmville, accounted for 12 percent of Facebook's revenue.

The company Zuckerberg started in his Harvard dorm room in 2004 that grew into a global phenomenon dwarfs any recent Internet debut, such as Zynga, LinkedIn Corp, Groupon Inc and Pandora Media Inc. Their IPOs had mixed receptions.

The last dotcom player to debut, Zynga, closed 5 percent below its IPO price during its first trading day in December.

Google raised just shy of $2 billion in 2004, while the more recent Groupon scared up $700 million and Zynga managed $1 billion.

Facebook's growing popularity among consumers and advertisers has pressured entrenched Internet companies such as Yahoo and Google. In 2011, Facebook overtook Yahoo to become the top provider of online display ads in the United States by revenue, according to industry research firm eMarketer.

"Zuckerberg is trying to send a bona fides message to techies and users," said Max Wolff, chief economic and senior analyst at GreenCrest Capital. "Very smart and under the radar."