Financial thoughts

At long last, the Holy Grail of Internet IPOs is here. Facebook filed Wednesday to raise $5 billion in an initial public offering.

In 2011, Facebook earned $1 billion on sales of $3.7 billion. As of December 31, Facebook had 845 million monthly active users.

The company crossed the line into profitability in 2009, five years after it launched in founder Mark Zuckerberg’s Harvard dorm room. Facebook earned $229 million that year on sales of $777 million, and has remained profitable ever since.

It’s not yet known on which stock exchange Facebook will trade, though it said it plans to use the ticker symbol "FB."

Facebook will likely re-file its paperwork several times over the coming months. Those updates will add more details and could even restate some of the financial information detailed in Wednesday’s filing.

In this initial paperwork, companies don’t declare how many shares they’re going to sell, or how much those shares will cost. Those details will be added in an updated filing shortly before trading begins.

Without that share price information, Facebook’s valuation is still speculative.

Facebook has its own guesses, though. The company said it conducted its own valuation of its stock at the end of each quarter, and as of December 31 determined it to be worth $29.73 a share.

Zuckerberg’s letter to investors: ‘Hacker Way’

Revenue breakdown: Advertising accounted for 85% of Facebook’s 2011 revenue, or almost $3.2 billion.

Facebook’s other revenue stream is its payment system for purchases within apps and games: Facebook Credits. Facebook keeps 30% of the revenue from those payments, and passes the remaining 70% on to the app developer.

Those fees brought in $557 million for Facebook last year.

Revenue from Zynga, which makes FarmVille and other games played on Facebook, represented 12% of Facebook’s total revenue in 2011.

About 44% of Facebook’s revenue came from overseas last year, compared with 38% in 2010 and 33% in 2009.

As of December 31, Facebook had $3.9 billion in cash and liquid assets.

Exec compensation: Another choice tidbit: In 2011, Facebook CEO Zuckerberg raked in a $500,000 base salary. But he requested — and will receive — only $1 per year in salary starting January 1, 2013.

Don’t feel too bad for Zuck, who remains the largest shareholder in the company he created. His total compensation in 2011 came to $1.48 million, according to Facebook’s calculations.

He was one of the lowest-paid among Facebook’s executive ranks. Facebook COO Sheryl Sandberg topped the list with a total package Facebook estimated at $30.9 million, almost all of it in stock.

Engineering VP Mike Schroepfer made an estimated $24.7 million — again, mostly in stock — while CFO David Ebersman collected an $18.7 million pay package. (For more on Ebersman, see Fortune’s profile: "The man behind the Facebook IPO.")

As far as the regular rank-and-file at Facebook, the company had 3,200 full-time employees as of December 31. That was a 50% increase from the previous year, and Facebook said it "expect[s] this growth to continue for the foreseeable future."

Facebook also noted that it has bought out some small companies mainly to acquire employees, and said that it intends to continue that strategy.

How much Facebook is worth: Trading won’t begin for several months, as Facebook now has to field questions from regulators and court investors for its stock sale.

Most analysts estimate Facebook’s valuation will fall somewhere between $85 billion to $100 billion. But the value of Web companies can be extremely volatile.

A recent example: Zynga (). The FarmVille maker’s IPO filing reported that it valued its shares in August 2011 at $17.20 each, which gave the company a valuation of $14 billion. But when Zynga went public in December, shares sold for just $10 — valuing the company at $7 billion.

Several other Internet companies made their public debuts in 2011, but the end of the year proved to be a turbulent time for the sector. Shares of Groupon (), Pandora (), Zillow (), LinkedIn () and Angie’s List () all suffered steep double-digit losses for November, though most clawed back at least a bit in December or January. 

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Valley Beef LLC, a franchisee of five St. Louis area Lion’s Choice restaurants, has filed for bankruptcy.

Clayton-based Valley Beef, led by Thomas Ginos, filed the Chapter 11 bankruptcy petition Thursday in St. Louis federal court and listed between $500,000 and $1 million in liabilities and assets of $50,000 or less. Its largest creditors holding unsecured claims are US Foods, which is owed $117,850, and Pulaski Bank, which has claims totaling $195,205.

Valley Beef’s Lion’s Choice locations in Chesterfield, St. Louis, Fenton, Wentzville and on Mid Rivers Mall Drive in St. Peters have 84 employees. Valley Beef shuttered a Lion’s Choice in downtown St. Louis in 2009.

Ginos became a franchisee of the restaurant chain that specializes in roast beef sandwiches in 2001. He plans to keep the five remaining restaurants open during the bankruptcy reorganization, according to his attorney, Robert Eggmann of Clayton-based law firm Desai Eggmann Mason. Eggmann said his client filed the bankruptcy to restructure debt and expects to emerge from bankruptcy within six months.

Lion’s Choice was founded in Ballwin in 1967 as Brittany Beef and has 15 company-owned restaurants in the St. Louis area that are not included in the bankruptcy. Jim Tobias, president of Lion’s Choice Restaurant Corp., said he did not expect the bankruptcy filing to interrupt operations at the five St. Louis area franchise restaurants. “We don’t expect any change in business,” Tobias said.

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For the St. Louis economy, this year looked a lot like the previous 20 or 30, and it’s a rut we really need to get out of.

Job growth lagged the nation. Well-known local companies succumbed to takeovers, without enough new businesses to take their place. Officials argued about strategy while failing to address the region’s deep-seated problems.

Denny Coleman, the president of the St. Louis County Economic Council, has been sounding the alarm about these issues recently, ever since the council commissioned a report on the region’s economic strategy.

One headline from the report, written by consulting firm AECOM, is that within two decades, because of slow population growth, we’ll no longer be one of the 20 largest U.S. metropolitan areas. We’re currently No. 18.

That top-20 ranking automatically confers big-city status. National retail chains want to have a presence in the top 20 markets; advertisers target their messages there. Cities in the next tier are important, but they have to fight harder for attention.

Coleman believes AECOM’s warning should be a wake-up call.

“We have been living off the wealth creation from select legacy companies here for some time,” he said. “While we’ve created some new, significant wealth, the competition in other metro areas is outpacing us.”

Want to talk legacy companies? Savvis, Smurfit Stone Container, LaBarge and Rehabcare were all acquired this year. St. Louis ranks poorly on indicators of the entrepreneurial activity that can replace them with new firms.

Or should we talk jobs? Metro St. Louis officially added 7,800 jobs between October 2010 and October 2011, an increase of 0.6 percent. Howard Wall, an economist at Lindenwood University, thinks that number will be revised to show a loss of 3,900 jobs make quick cash.

Either way, St. Louis is a laggard. Nationally, employment grew by 1.2 percent in the same 12 months, twice as fast as the optimistic St. Louis estimate.

“Don’t we have this conversation every year?” Wall said when I asked about the sluggish local job market.

Yes, we do. And how do St. Louis’ leaders try to break out of this rut? For one thing, they spent years pursuing the “big idea” of a hub for Chinese cargo planes, only to have the Missouri Legislature shoot down the incentives that the plan required. It’s not a good precedent.

Recently, other rifts have been exposed. Mayor Francis Slay called for the Regional Chamber and Growth Association, a private-sector group, to cede its economic development duties to a joint city-county agency.

Coleman hasn’t gone quite so far, but he does accuse the RCGA of “mission creep.” As he sees it, the RCGA should concentrate on marketing the region and recruiting companies that want to expand or relocate.

The jobs of retaining local employers, encouraging startups and improving the work force, Coleman believes, should fall to agencies in each city or county. He says he was surprised when those showed up as objectives in the RCGA’s latest strategic plan. Coleman says he’s encouraged by the appointment of Joe Reagan as the new RCGA president. The region’s economic development structure “can work, but it’s a matter of making sure you have a clear separation of responsibilities,” Coleman says.

Slay, Reagan, Coleman and others clearly have plenty to discuss. Let’s hope they quickly get beyond turf wars.

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Spain paid an interest rate of nearly 7 percent to raise euro3.56 billion ($4.8 billion) in an auction of 10-year bonds Thursday, the highest rate since 1997 and a level seen as unsustainable over the long term.

The finance minister insisted, however, that a bailout was out of the question and said Spain’s overall debt load _ about 70 percent of gross domestic product _ is manageable.

“The sustainability of our debt is beyond any doubt,” Elena Salgado told Cadena Ser radio.

She said the 2011 budget had allotted euro27 billion for debt interest payments and “even with all this tension we are going to spend 3 billion less.”

Salgado also said at least 12 of the 17 countries that use the euro are seeing their borrowing costs rise, so Spain is not a special case.

“We are seeing systematic attacks on our sovereign debt” the minister said. “Today it is Spain, yesterday it was Italy, the day before that it could have been Belgium, and tomorrow it could be any other country, even the ones considered central to the euro, such as Austria or France.”

Thursday’s rate of 6.97 percent compared with 5.43 percent in the last such auction Oct. 20.

Demand was relatively weak. The amount of debt sold came in under the euro4 billion maximum target set by the Treasury and the bid to cover ratio was 1 cheap payday advance.54, compared with 1.76 last time.

After the auction, yields on Spanish 10-year bonds shot up. In early afternoon they stood at 6.79 percent on the secondary market. That was 4.93 percentage points above the yield of the equivalent benchmark German bund.

Spain’s chapter of the European debt crisis has engulfed the campaign for Sunday’s general elections.

Opposition conservatives are expected to score a landslide win over the ruling Socialists, saddled with an economy that has 21.5 percent unemployment, posted zero growth in the third quarter and is not expected to improve much next year.

Spain is struggling to recover significant economic growth after enduring nearly two years of recession prompted in part by the collapse of a real estate bubble. It is the periodic focus of fears it will be the next eurozone country to require a bailout, after Greece, Ireland and Portugal.

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Russia’s influential finance minister resigned Monday following a televised confrontation with President Dmitry Medvedev, who had angrily demanded that Alexei Kudrin immediately explain his criticism of Medvedev’s policies or step down.

The open tension within Russia’s leadership follows the announcement over the weekend that Prime Minister Vladimir Putin plans to return to the presidency next year and Medvedev would then take his old job as prime minister. Russia will have a presidential vote despite the backroom maneuvering, but Putin is sure to win it.

The departure of Kudrin is likely to unsettle investors. He has been finance minister since 2000 and his tight hold over the budget has been seen as the key to Russia’s economic stability.

“It is difficult to see how Mr. Kudrin’s resignation can be anything but market-negative,” said Neil Shearing, chief Emerging Markets economist at Capital Economics Ltd in London. “With oil prices starting to slide and financial markets still jittery, now is not a good time for the government to lose its arch-fiscal hawk.”

Speaking over the weekend, Kudrin said he would refuse to serve if Medvedev was made prime minister because of disagreements over policy, including plans to substantially boost military spending.

Addressing Kudrin on Monday, Medvedev called the minister’s remarks “irresponsible chatter” and “improper,” especially since they were made in the United States while the minister was in Washington for meetings of the International Monetary Fund and the World Bank.

“If you disagree with the course set by the president and being implemented by the government, you have only one choice: Resign,” Medvedev said.

Kudrin said he would decide only after talking to Putin.

“You can seek the advice of whomever you want, but as long as I’m president, such decisions are made by me,” Medvedev retorted.

The Kremlin said Medvedev signed a decree on Kudrin’s resignation. Kudrin confirmed that he had quit in brief remarks reported by state news agencies.

Kudrin has been widely credited with helping Russia weather the 2008-2009 global financial crisis. During Putin’s presidency from 2000 to 2008, Kudrin stashed some of the revenue from Russia’s oil exports in a stabilization fund, despite strong opposition from other ministers who wanted to spend the money. But when the financial crisis hit and oil prices sank sharply those savings proved crucial in reducing the blow to Russia’s economy.

Some market analysts speculated that Kudrin’s departure could have a greater effect on Russia’s economy than the 2012 presidential election itself.

“It is unlikely that Mr. Kudrin’s replacement will share his predecessor’s credentials and clout,” Shearing wrote in a note to investors.

Before last weekend, Kudrin had been mentioned as a possible prime minister under Putin if Putin returns to the presidency.

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MONTREAL

A Samsung unit is raising the ante in a patent dispute with a German rival over energy-saving LED lighting amid intensifying legal disputes among global companies jockeying for supremacy in key consumer technologies.

Samsung LED Co. said Sunday that it has asked the United States International Trade Commission to bar products of Osram GmbH and two units from entering the U.S.

Suwon, South Korea-based Samsung LED said it also filed a lawsuit in a U.S. district court in the state of Delaware alleging infringement of its LED patents, seeking unspecified damages.

Samsung LED is targeting Osram, Osram Opto Semiconductors and Osram Sylvania Inc. in the actions. Munich-based Osram GmbH is a unit of German industrial engineering giant Siemens AG. Osram Sylvania is Osram’s North American operation, based in Danvers, Massachusetts.

Last month, Samsung LED sued Osram Korea Co. and two local companies that sell its products in South Korea in retaliation for what is said were suits by Osram at the USITC, in the Delaware court and in Germany.

“Samsung LED intends to vigorously enforce its intellectual property rights, and these lawsuits reflect Samsung LED’s commitment to that enforcement,” the company said in a release.

Osram could not immediately be reached for comment.

Samsung LED is alleging infringement of eight patents covering what it calls “core” LED technologies used in products such as lighting, automobiles, projectors, mobile phone screens and TVs.

Semiconductor-based LEDs, or light emitting diodes, are becoming increasingly popular for their durability and energy-saving capability.

Samsung LED also suggested it could expand the scope of the USITC case pay day loan lenders.

“As new information becomes available it will continue to evaluate the potential to add additional parties who may be importing, using or selling the accused Osram LEDs in the U.S. market,” the company said in the release.

Samsung LED was established in 2009 as a joint venture between Samsung Electronics Co. and Samsung Electro-Mechanics Co.

Such complaints and lawsuits are common in the global technology industry and seldom lead to market disruptions as disputes take months or years to resolve and typically end with payments of licensing fees rather than any import bans.

Still, they highlight the intensity of competition in which technological advantage can give companies a key edge in attracting consumers.

Rochester, New York-based Eastman Kodak Co. has an ongoing patent dispute over photo technology at the USITC with Apple Inc. of Cupertino, California, and BlackBerry maker Research in Motion Ltd. of Waterloo, Canada.

Samsung companies are taking an aggressive stance in global technology patent wars.

Samsung Electronics is embroiled in multiple complaints and lawsuits with Apple Inc. over smartphone and tablet technology. Separately, Samsung and Taiwan’s AU Optronics Corp. have launched legal actions against each other over alleged patent infringement in liquid crystal displays.

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Associated Press writer Debby Wu in Taipei, Taiwan, contributed to this report.

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US stock futures are nearly flat as traders await the government’s key report on hiring and unemployment in June.

The data will show whether the economy has rebounded after slowing down this summer because of high gas prices and crises in Japan.

Major U.S. stock indices have recovered to near their highs for the year, reached on April 29. Two weeks ago, bad economic data had them near their yearly lows.

A strong jobs report Friday could jolt Wall Street, pushing stocks past those benchmarks.

Before the opening bell, Dow Jones industrial average futures are up 9 points, or 0.1 percent, at 12,690. Standard & Poor’s 500 futures are down a fraction at 1,351. Nasdaq 100 futures are up 2, or 0.1 percent at 2,418.

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Greece wants to conclude negotiations for a second bailout by the end of the summer “at the latest,” the country’s new finance minister said Monday, at the start of a parliamentary debate on unpopular but crucial austerity measures.

A new euro28 billion ($40 billion) Greek austerity package and implementation law must be passed in parliamentary votes this week so the European Union and the International Monetary Fund release the next installment of Greece’s euro110 billion ($156 billion) bailout loan.

Without it, Greece faces the prospect next month of becoming the first eurozone country to default on its debts _ a potentially disastrous event that could drag down European banks and affect other financially troubled European countries.

Finance Minister Evangelos Venizelos, who only assumed the post in a June 17 cabinet reshuffle, said the euro12 billion ($17 billion) installment will cover the country’s borrowing needs until mid-September.

“And between now and the end of the summer at the latest, we must seriously negotiate the new program with our partner _ the European Commission, the European Central Bank and the IMF _ and guarantee viability of the national debt with the participation of private investors internationally,” Venizelos said.

It has become clear that the initial bailout from May 2010 is not enough to pull Greece out of its financial crisis. The country’s international creditors are now discussing a second bailout, which Prime Minister George Papandreou has said it will be roughly the same size as the first. Many investors, meanwhile, believe that Greek’s debt burden is too great to handle without defaulting regardless of the bailouts.

Venizelos on Monday urged Greek opposition parties to back the government in negotiations with the country’s international creditors.

The main opposition leader, the conservative New Democracy party’s Antonis Samaras, has so far resisted intense European pressure to back the new austerity bill. While Samaras supports cost-cutting measures and the sale of some government assets, he has called the thinking behind the austerity bill flawed. He says tax rates should be lowered rather than raised in order to stimulate an economy in recession.

“I call on New Democracy and the other parties: Come, let’s negotiate together. And once we have negotiated, we will have a better result because it will have greater national strength,” Venizelos said.

Parliament is to vote on the austerity bill Wednesday, and on an additional law on implementing the measures Thursday. The new cuts have caused widespread anger, and unions have declared a 48-hour nationwide general strike for Tuesday and Wednesday to coincide with the parliamentary debate and vote.

Protesters also say they will encircle parliament on Wednesday to prevent deputies from entering the building to vote.

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Businesses added to their stockpiles for a 16th consecutive month in April. But their sales grew at the slowest pace in 10 months, a sign that many companies could be forced to slash supply levels soon if the economy weakens further.

The Commerce Department says business supply levels grew 0.8 percent in April and sales rose for a 10th straight month. But the 0.1 percent sales increase was the smallest since sales fell 0.5 percent in June of last year.

The concern is that with the economy slowing, businesses may have miscalculated on consumer demand and could be stuck with unwanted inventories. That would trigger cutbacks in orders and cause manufacturing activity to slow.

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