Market Exchange Top story 2012

December 8, 2012.

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1.   Facebook IPO: Even before its stock began trading on the NASDAQ exchange last May 18, analysts had been sounding warnings that Facebook’s long-awaited initial public offering might be over-hyped. The world’s best known social network, with more than a billion users, was running out of people to sign up and it wasn’t as successful as Google in monetizing its content, especially on mobile devices, some said. But few were expecting the disaster that ensued. Initially floated at $US38 — potentially about $100 billion in overall capitalization and raising $16 billion on initial sales — Facebook shares experienced only a tiny opening bump (about 23 cents) before beginning a long slide from which they’re only beginning to recover. At one point last summer they were as low as $18.

Predictably, the fiasco has degenerated into legal battles (more than two-dozen class actions by late September) amid allegations the stock had been overpriced while its underwriters were making depressed earnings forecasts. The IPO still made Facebook founder Mark Zuckerberg and his partners very rich. But the disaster was a lesson to small investors and entrepreneurs alike that web buzz aside, market fundamentals matter.

2.   Decline of RIM: Research In Motion’s decline continued in 2012. Canada’s biggest technology darling since Northern Telecom had pioneered the smartphone with its iconic Blackberry. Losing an important patent-infringement suit, forcing a US$612-million settlement in 2006, hardly slowed its worldwide momentum. But its leadership was undermined by its refusal to take Apple’s iPhone and Google-based Android phones seriously as competition among its important business users. Its attempts to match those devices fell flat, thanks partly to a lack of apps. Its answer to the iPad, the Playbook, bombed in 2011 and RIM began cutting its workforce.

By January of 2012, shareholders had had enough and forced RIM co-CEOs Jim Balsillie and Mike Lazaridis to step down, handing the reins to chief operating officer Thorsten Heins. To make things worse, its Blackberry 10 smartphone languished in development, the company spooked by the flop of its half-baked Playbook tablet. The launch was delayed to March 2013 and, amid red ink, RIM continued slashing jobs. It overcame network outages and increased its subscriber base, but unless the BB10 is a hit, many observers think rumours of a takeover that have floated all year may come true.

Source : Yahoo news.