Apparently, Facebook has a lot of friends.

Clickety-clicking ones, whose massive interest in the just-filed IPO of the Silicon Valley social networking giant seems to have temporarily crashed the Securities and Exchange Commission’s EDGAR Web site, where anyone can access regulatory documents on companies.

We’re calling the SEC for comment right now, but the site is still hanging, and sources said the reason is the Facebook initial public offering filing.

Update: It’s back up! Though slow. Still, go government!

Another Update: The SEC got back to us and in response to the question of whether this was related to a Facebook surge, spokesman John Nester said, “Greatly increased traffic that began shortly before 5 pm slowed the public website. We are bringing on additional capacity to handle the load.”

MORE ON THE FACEBOOK IPO:

• Facebook’s Ad Business Is a $3 Billion Mystery
• Viral Video: Farewell to the No-IPO Mark Zuckerberg
• Zuckerberg Is the Billion-Share Man: Who Owns What, Who Makes What in the Facebook IPO
• Zuckerberg Tells Investors, “We Don’t Build Services to Make Money”
• Mobile Highlighted as Key Risk Factor (and Opportunity) in Facebook Filing
• Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site
• Zynga Accounted for 12 Percent of Facebook’s Revenue in 2011
• Facebook Has 845 Million Users
• On Its Eighth Birthday, Facebook Files to Raise $5 Billion in Massive IPO (Get Your S-1 Here!)
• Go the F**k Back to Sleep, Silicon Valley: Facebook IPO Likely to File Later Today at Earliest
• Dude, Where’s My Facebook IPO Filing? (Ashton’s on Hold!)
• The Quiet Man: Meet the Less-Known Face of the Facebook IPO, CFO David Ebersman
• Facebook Board Meeting Today for Final IPO Okays
• Facebook (Eye)PO: Tracking the Truth of the Biggest Deal of Web 2.0
• Viral Graphic: Visualizing the Facebook IPO
• Is Facebook IPO on Track for Late May?
• IPO Watch: Facebook Hiring Brunswick to Help With Comms for Expected Public Offering
• Complete Facebook coverage

Here are the major stats on Facebook’s IPO, which it just filed: 845 million monthly users and 483 million daily users; annual revenue of $3.7 billion; $1.8 billion in annual operating income and $1 billion net income.

And the raise in the initial public offering for now? It’s $5 billion. That could go up, of course; as yet, there is no valuation listed in the S-1 filing with the Securities and Exchange Commission for the social networking giant.

Let’s just say, it will be a lot.

And here are some uh-oh stats:

A full 12 percent of Facebook’s revenue in 2011 was linked to its relationship with online gaming giant Zynga.

And overall growth is slowing too.

Said Facebook’s filing:

“We believe that our rates of user and revenue growth will decline over time. For example, our annual revenue grew 154% from 2009 to 2010 and 88% from 2010 to 2011. Historically, our user growth has been a primary driver of growth in our revenue. Our user growth and revenue growth rates will inevitably slow as we achieve higher market penetration rates, as our revenue increases to higher levels, and as we experience increased competition.”

That is still en fuego, but will be noted by many.

In case you were visiting the outer rings of Jupiter and did not hear, you might want to know that Facebook filed for an initial public offering today. It is perhaps the most eagerly anticipated of financial events in Silicon Valley in many years.

The massive social networking site — which was launched in an undergraduate dorm room at Harvard University on the first Wednesday in February 2004, exactly eight years ago — is now a global phenomenon.

Its rocket ride to the top of the Internet and in Silicon Valley has been largely due to the aggressive innovation of one very unusual founder, CEO and co-founder Mark Zuckerberg.

Assembling an experienced team and pushing through a series of sometimes controversial products to link friends together online, the young entrepreneur has built a service that now is challenging even search giant Google.

Zuckerberg has been slow to take the company public, although the move was inevitable.

And now, of course, it is here.

More to come, as the ATD team parses the IPO filing, which is below (so join in!):

FacebookInc-20120201-S1-0

MORE ON THE FACEBOOK IPO:

• Facebook’s Ad Business Is a $3 Billion Mystery
• Viral Video: Farewell to the No-IPO Mark Zuckerberg
• Zuckerberg Is the Billion-Share Man: Who Owns What, Who Makes What in the Facebook IPO
• Zuckerberg Tells Investors, “We Don’t Build Services to Make Money”
• Mobile Highlighted as Key Risk Factor (and Opportunity) in Facebook Filing
• Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site
• Zynga Accounted for 12 Percent of Facebook’s Revenue in 2011
• Facebook Has 845 Million Users
• On Its Eighth Birthday, Facebook Files to Raise $5 Billion in Massive IPO (Get Your S-1 Here!)
• Go the F**k Back to Sleep, Silicon Valley: Facebook IPO Likely to File Later Today at Earliest
• Dude, Where’s My Facebook IPO Filing? (Ashton’s on Hold!)
• The Quiet Man: Meet the Less-Known Face of the Facebook IPO, CFO David Ebersman
• Facebook Board Meeting Today for Final IPO Okays
• Facebook (Eye)PO: Tracking the Truth of the Biggest Deal of Web 2.0
• Viral Graphic: Visualizing the Facebook IPO
• Is Facebook IPO on Track for Late May?
• IPO Watch: Facebook Hiring Brunswick to Help With Comms for Expected Public Offering
• Complete Facebook coverage

Okay, okay, we get it: Morgan Stanley got the coveted left-hand lead position on Facebook’s blockbuster IPO filing. Goldman Sachs is there, too, but in the third-place, always-a-bridesmaid spo,t and is crying big salty tears about the injustice of it all.

It’s hard to feel badly for overpaid investment bankers, and focusing on them is kind of like endlessly discussing the lawyers who processed your mortgage, when the focus should be on the house you’re buying.

Does anyone except a few Richie Rich ZIP Codes in Manhattan care about this one deet of the initial public offering of the social networking giant?

Nope, but there is so little real news ahead of the IPO filing expected today that this is what we are chomping on this morning, as everyone awaits the big doc drop at the Securities and Exchange Commission.

Sources said it is likely to come this afternoon rather than this morning, though. And, perish the thought, all that dotting of I’s and crossing of T’s could delay it to tomorrow, even (unlikely, but mebbe!).

Sigh.

Tidbit: Facebook was actually founded the first Wednesday in February of 2004 in an undergraduate dorm room at Harvard University, like today but eight years later.

Thus, here’s a boring Facebook history timeline chart to look at:

Okay, that was really dull.

What up? The board met, the spinmeisters are at the ready and, most of all, Silicon Valley is stoked to make some more arrogant badillionaires.

Now, hopefully, we’ll get the real news about Facebook.

Namely, who’s getting the big dough in this much-anticipated Web 2.0 gambit? Co-founder and CEO and Hoodie Commander Mark Zuckerberg fer sure, but who else?

Plus all the juicy financials from Facebook, along with stats in usage, growth and just how much the company sticks it to its gaming serf — oops, partner — Zynga and others for the privilege of being on its all-powerful platform.

Me? I pay nada, like other Facebook users, for being able to show off pictures of my vacations and decline friendships from PR people I like, but still … well, you know.

Here is another Facebook financial chart that will not knock your socks off unless you are an accountant:

I am now so comatose waiting for the show to begin that I briefly began a liveblog of my activities this morning.

It went like this:

4:45 am PT: Done with AOL Q4 earnings, which were meh, but better meh than expected. AOL, if you recall, used to be Facebook and now is, um, not.

Note to Zuckerberg: Be nice to people on your way up, since you’ll meet them again on the way down.

4:46 am PT: I check the SEC site and get zip. Click, click, clickety-click over to find out the latest on Demi Moore and her fake-pot debacle.

Who knew there was synthetic cannabis and it is called K2 or Spice? Not me! According to Wikipedia: “It seems likely that synthetic cannabis can precipitate psychosis and in some cases it is prolonged.”

I decide to blame Ashton Kutcher and then wonder if he is an investor in Facebook via BFF-to-errant-celebrities-who-like-tech Ron Conway, also a Facebook investor.

Note to self: Call Ashton! That dude plays village idiots all the time, but I am not fooled by Mr. Pretty Face.

4:47 am PT: I consider email bombing Yahoo’s Jerry Yang, who is probably not so busy right now, and asking him what he thinks about the Demi Moore crisis and also Facebook’s IPO.

Remember when Yahoo was king of Silicon Valley and Yang posed in that purple VW on the cover of that magazine? Better still, remember when Yahoo was going to buy Facebook for just over $1 billion and then borked it?

Just sayin’, Mark — so, keep it reals!

4:48 am PT: I consider going out for doughnuts — and not because of any real weed need. I just would like me some glazed and sprinkled sugar treats right about now. Then, I could post the pictures of them on my Facebook page.

Sweet.

But you-know-who would file right when I left the house on the munchie run. Click, click, clickety-click over to the SEC site and I come up peanuts.

Time to check in on the Kardashians.

You get the idea — so, Facebook IPO, take me away!

MORE ON THE FACEBOOK IPO:

• Facebook’s Ad Business Is a $3 Billion Mystery
• Viral Video: Farewell to the No-IPO Mark Zuckerberg
• Zuckerberg Is the Billion-Share Man: Who Owns What, Who Makes What in the Facebook IPO
• Zuckerberg Tells Investors, “We Don’t Build Services to Make Money”
• Mobile Highlighted as Key Risk Factor (and Opportunity) in Facebook Filing
• Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site
• Zynga Accounted for 12 Percent of Facebook’s Revenue in 2011
• Facebook Has 845 Million Users
• On Its Eighth Birthday, Facebook Files to Raise $5 Billion in Massive IPO (Get Your S-1 Here!)
• Go the F**k Back to Sleep, Silicon Valley: Facebook IPO Likely to File Later Today at Earliest
• Dude, Where’s My Facebook IPO Filing? (Ashton’s on Hold!)
• The Quiet Man: Meet the Less-Known Face of the Facebook IPO, CFO David Ebersman
• Facebook Board Meeting Today for Final IPO Okays
• Facebook (Eye)PO: Tracking the Truth of the Biggest Deal of Web 2.0
• Viral Graphic: Visualizing the Facebook IPO
• Is Facebook IPO on Track for Late May?
• IPO Watch: Facebook Hiring Brunswick to Help With Comms for Expected Public Offering
• Complete Facebook coverage

According to multiple sources, the long-anticipated public offering of Facebook is now likely to come in the third week of May.

That means that the company must file its IPO documents within the next month, given that the review by the Securities and Exchange Commission usually takes about three to four months.

That’s if there are no issues, of course, such as a turbulent market or thornier-than-usual questions from regulators that require amending the filing.

Groupon, for example, filed for its IPO in early June, but did not go public until five months later in November.

The usual caveat on the late-May timing (even though I called 143 people on this one): This IPO planning could all change, in a New York minute, to another month.

In any case, the Facebook IPO is expected to be one of the largest Web offerings ever — with some reports saying the company will be raising $10 billion on a $100 billion valuation. (The valuation and raise, sources tell me, will be much lower.)

That amount is presumably to match its huge consumer growth and revenue explosion. Users now number 800 million — a figure that is likely to hit one billion this year. And revenue, which was reportedly close to $4 billion in 2011, is expected to be higher by another third in 2012.

Facebook will need such oomph if it is to impress investors, although the social networking site’s leadership is still warning that its focus is products over dollars.

In an interview with The Wall Street Journal last week, for example, co-founder and CEO Mark Zuckerberg hedged the point, even as he sang his same familiar strategic tune of the last few years.

“The thing to take away isn’t that we don’t care [about business]. People for years were asking me why aren’t we trying to make more money,” he said. “I would say I’m trying to build a business for the long term and it was clearly the right strategy.”

While admirably I’ll-row-my-way in tone, Zuckerberg needs a public offering heft more than ever, as Facebook’s battles with rivals — most especially Google — escalate.

Just last week, the monocratically-inclined search giant ham-handedly shoved its own social networking service, Google+, into its results, in a move that could severely disadvantage Facebook.

Thus, into the Wall Street breach, to get a giant pile of dough to fight back!

But, unlike Google’s more kookified 2004 IPO, sources said Facebook’s is probably going to hew to a more traditional offering script.

That is likely to include a hefty consortium of irksome investment bankers — think firms like Goldman Sachs and Morgan Stanley on top of the filings, and a spate of smaller ones (Allen & Co.) below, and you have the approximately accurate idea.

And, while shot-caller-in-chief Zuckerberg will be the one key voice in the IPO, the man to watch has been and will be CFO David Ebersman.

The longtime Genentech exec, who came to Facebook in 2009, has been doing all the heavy lifting in preparation for the IPO, said sources, and will continue to do so.

Facebook declined to comment (but I would too, if I were them).

Facebook is in internal discussions over the timing of its filing with the Securities and Exchange Commission for the IPO, and is considering filing dates as early as this year, these people said.

Read the rest of this post on the original site »

As I reported earlier today, social gaming giant Zynga has posted another filing with the Securities and Exchange Commission.

That includes Chief Business Officer Owen Van Natta stepping out of an operational role and forfeiting shares in the process. To be exact: That will be 4.6 million options and close to 800,000 restricted stock units.

All of the details are in his transition letter in Zynga’s massive new S-1, which is in exhibit 10.12 to the amendment filing.

I would start at page 119, but to summarize: Van Natta is keeping all the vested stock options and restricted stock units, currently more than two million stock options that are already vested and another 936,000 RSUs (Zynga calls them ZSUs) already vested. He also has another 750,000 shares that will continue to vest due to his board position.

But, because he is no longer an employee, he is forfeiting all his unvested employee stock options and RSUs. Although it does seem like a lot, this is typical in such cases.

I need to go to lunch, so just read it for yourself:

ZYNGAINC-20111117-S1A-0

In a new filing with the Securities and Exchange Commission concerning its upcoming IPO, Zynga is expected to unveil two key management and board changes at the online gaming phenom:

Chief Business Officer Owen Van Natta — who came to the San Francisco-based start-up several years ago to help CEO Mark Pincus grow it and develop it — will step down from his job and become a strategic adviser focusing on major partnerships. He’ll still remain board member at Zynga, but will give up millions of pre-IPO shares by moving out of his operational role.

And director and venture investor Brad Feld will leave the the board, which VCs sometime do as companies move to a public offering and add members with more specific business experience.

In his place, longtime entrepreneur and investor Sunil Paul, who founded a company called FreeLoader with Pincus many moons ago, will join the board.

Zynga confirmed the changes to me in a statement by Pincus:

“Owen is a valuable business partner. He’s made great contributions to Zynga and continues to be an important part of our team.”

Sources said the changes related to Van Natta around are not part of a recent controversy around a Wall Street Journal story about clawing back of some share options grants of early Zynga employees who had become less involved in the company. While the company cannot actually take back already vested shares owned by those staffers, the article has put a lot of scrutiny on Zynga and raised questions about how to cope with the kind of hyper-growth some Internet firms experience.

That’s certainly been the kind of rocket ride Zynga has been on, as it has grown from a small social gaming company on Facebook to a high-profile public company.

Zynga is in the final stages of its IPO process, answering questions from the SEC that are typical. If all goes well, Zynga execs are expected to go on a road show after the Thanksgiving and go public by the end of the year at a market valuation of close to $20 billion.

That was different from when Van Natta officially got to Zynga in the spring of last year — after a rocky experience running the doomed Myspace. At the time, he told me at the time that planned to be focused on scaling the business and did not consider himself a long-term operating executive.

Since then, he has helped Pincus hire a series of experienced gaming execs, including a chief operating officer, a chief marketing officer and others.

Zynga was Van Natta’s third high-profile Web company in recent years. He was a top early exec for Mark Zuckerberg at Facebook until early 2008, and in 2009 he took over News Corp.’s (NWS) MySpace, a job that lasted less than a year.

Early in his career, Van Natta was also was a top strategy, marketing and deal exec for Amazon, which bought an early social networking start-up called PlanetAll that he worked at.

It will now be interesting to see what Van Natta does next, but it is unlikely he will take a permanent position. He is a longtime angel investor in Silicon Valley, including in hot start-ups such as Asana and still holds a significant stake in Facebook.

But, in moving out of his job at Zynga, he will be giving up many millions of shares of a rich trove he was given when he arrived at the company. That said, Van Natta already owns millions of accelerated vested shares and will get another large grant as a board member.

Translation: Don’t cry for Mr. Van Natta, Silicon Valley — he made $42 million last year from Zynga shares alone.

Third Point’s Daniel Loeb — the smack-tastic hedge fund manager who has bought up a 5.23 percent stake in the Silicon Valley Internet giant and has been hitting some of Yahoo’s board upside the head with those shares ever since — is now taking aim at its co-founder and director Jerry Yang. Loeb wants him to step down as a director due to conflict of interest.

Loeb also reiterated his threat of a proxy fight to get control of the board. In fact, sources in Silicon Valley said he has already been reaching out to potential alternative board members.

In a previous 13-D filing with the Securities and Exchange Commission, Loeb had backed Yang against Yahoo Chairman Roy Bostock.

But that’s all over. Reports have surfaced that Yang has been trying to get a private equity firm to back a plan that would keep him and current management in charge of the company.

In a new letter to the Yahoo board today, Loeb said that Yang’s attempt amounts to cronyism and self-dealing.

Wrote Loeb, in part:

We are deeply concerned by news reports that you are considering a leveraged recapitalization that will allow private equity firms to gain substantial equity positions that will, when combined with Jerry Yang’s and David Filo’s ownership, effectively establish a controlling position in Yahoo. More troubling are reports that Mr. Yang is engaging in one-off discussions with private equity firms, presumably because it is in his best personal interests to do so. The Board and the Strategic Committee should not have permitted Mr. Yang to engage in these discussions, particularly given his ineptitude in dealing with the Microsoft negotiations to purchase the Company in 2008; it is now clear that he is simply not aligned with shareholders. At a bare minimum, Mr. Yang must declare whether he is a buyer or a seller — he cannot be both. If we are correct and he is effectively a buyer, corporate ethics require him to recuse himself from any further discussions on behalf of the Company. He should also be requested by the Company to promptly leave the Board and join Mr. Filo in solely an operating capacity.

Loeb is also demanding two seats on the board; in fact, the ones he hopes will be vacated by Bostock and Yang.

While it is likely the Yahoo board will try to minimize the Loeb letter, which is below in its entirety, other shareholders hold the same opinion of the prospects of the same-old-same-old staying on at Yahoo.

“Nothing can excuse such an action, and shareholders will not be bought off with a dividend of our own money while value is destroyed,” wrote Loeb, channeling a lot of others I have spoken to about a Yang insider deal.

Here is the full letter, Yahoo’s tiresomely typical (and borderline fibbish — but I will get to that later) rejoinder, as well the the new 13-D filing by Loeb:

Third Point LLC Letter to Yahoo! Inc. Board of Directors

NEW YORK — (BUSINESS WIRE) — Third Point Requests Two Yahoo Board Seats, Demands Yang’s Resignation from Board, and Opposes Reported Negotiations for “Sweetheart” Deal with Private Equity Firms

About Third Point LLC: Third Point is an investment firm headquartered in New York, managing $8.0 billion in assets, including a London Stock Exchange listed closed-end fund. Founded in 1995, Third Point follows an event-driven approach to investing globally.

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Dear Members of the Board of Directors:

As you are aware, Third Point LLC (“Third Point”) manages investment funds that are, collectively, the second largest shareholder of Yahoo! Inc. (“Yahoo” or the “Company”).

We are deeply concerned by news reports that you are considering a leveraged recapitalization that will allow private equity firms to gain substantial equity positions that will, when combined with Jerry Yang’s and David Filo’s ownership, effectively establish a controlling position in Yahoo. More troubling are reports that Mr. Yang is engaging in one-off discussions with private equity firms, presumably because it is in his best personal interests to do so. The Board and the Strategic Committee should not have permitted Mr. Yang to engage in these discussions, particularly given his ineptitude in dealing with the Microsoft negotiations to purchase the Company in 2008; it is now clear that he is simply not aligned with shareholders. At a bare minimum, Mr. Yang must declare whether he is a buyer or a seller — he cannot be both. If we are correct and he is effectively a buyer, corporate ethics require him to recuse himself from any further discussions on behalf of the Company. He should also be requested by the Company to promptly leave the Board and join Mr. Filo in solely an operating capacity.

In our view, a leveraged recapitalization makes no sense and its only purpose would be to put substantial equity stakes into friendly hands to entrench management and transfer effective control without payment of a premium or even, it appears, a shareholder vote. Nothing can excuse such an action, and shareholders will not be bought off with a dividend of our own money while value is destroyed.

Moreover, such a transaction would undermine the basic tenets of free markets, including democratic voting, accountability and fairness. We do not blame our friends at the private equity firms rumored to be involved for trying to get the best deal possible for their investors; we have great respect for these firms and their leaders — Jim Coulter of Texas Pacific Group, Jonathan Nelson of Providence Equity Partners, Glenn Hutchins of Silver Lake, Henry Kravis of KKR and Stephen Schwarzman of Blackstone. However, we at Third Point are also in the value-maximizing business. We will not tolerate any transaction which appropriates for insiders opportunities that duly belong to current Yahoo shareholders. However, we would welcome the prospect of any of these firms’ presence on a reconstituted Yahoo Board of Directors and work on a long-term strategy for the Company should it be necessary for us to pursue a proxy contest next year.

If you, as board members, undertake the current course of action, Third Point will hold you personally responsible for such a flagrant violation of your duty of loyalty. Any transaction with a third party who assists members of management and the board in protecting their jobs, and/or involves the effective sale or transfer of control without payment of a control premium, will likewise be subject to scrutiny.

Given the Board’s inability — or perhaps unwillingness — to properly solicit true strategic alternative bids, let alone to negotiate them, Third Point demands that we be awarded two board seats — those created by the vacancies of Chairman Bostock and Mr. Yang, or two newly-created ones. We are prepared to assume these positions immediately.

Sincerely,

Daniel S. Loeb
Chief Executive Officer
Third Point LLC
390 Park Avenue
New York, New York 10022

Yahoo’s Board of Directors’ objective is, and always has been, to serve the best interests of all the company’s shareholders. The Board’s comprehensive strategic review is being properly managed for the benefit of all shareholders and is guided by outside counsel for the independent directors and investment bankers retained separately by the Board. The Board of Directors (eight independents and Mr. Yang) controls the strategic review process and has directed its Transactions and Strategic Planning Committee (comprised of four independent directors) to manage the process day-to-day and report regularly to the Board.

News reports based on rumor and speculation are just that. The Board’s comprehensive strategic review process is still underway, with a wide range of options under active consideration. We can assure all Yahoo shareholders that whatever the outcome of the strategic review process may be, it will serve the best interests of all the company’s shareholders.

Mr. Yang is one of 9 directors with the exact same fiduciary duties and motivation as all of his fellow directors — to serve the best interests of all the company’s shareholders. The Board and the Transactions and Strategic Planning Committee initiate, direct, and oversee any work Mr. Yang undertakes in relation to the strategic review process.

YHOO-20111104-SC13DA-0

The cautionary statement, in a filing with the Securities and Exchange Commission, came as the company reported another drop in cash in for third quarter, even after it drew $160 million from its credit line.

Read the rest of this post on the original site »

While they are usually much less voluble than the chatty Web execs of Silicon Valley, the execs who run China’s fast-growing Internet companies seem to be keeping up just fine of late.

On Friday, for example, the Alibaba Group’s Jack Ma was positively effusive about wanting to buy all of Yahoo, a company which actually owns 40 percent of Alibaba. “We are very, very interested,” said Ma at an event at Stanford University.

Now, in an interview with Bloomberg, Renren CEO Joe Chen decided to take a smack at Ma over his disputed spinoff of its Alipay payments unit, which caused a high-profile ruckus with Yahoo earlier this year.

“It’s quite unfortunate,” Chen said to Bloomberg about disagreement, which has since been settled. “It caused a lot of uncertainty about Chinese Internet companies.”

Them’s fightin’ words, and a source close to Alibaba reacted with, well, reaction.

“Yeah, it shook confidence so badly that Silver Lake and DST [Global] just decided to put in billions to back Jack Ma,” referring to a recent funding deal by the large investors. “People shouldn’t try to blame their own lack of performance on others.”

Ouch!

Actually, Renren has bigger problems than Alibaba.

According to a substantive report in The Wall Street Journal yesterday, what’s really hurting Chinese Internet companies is the declining stocks caused by recent accounting scandals there, which may have attracted scrutiny from U.S. regulators.

Wrote the Journal: “A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.”

Hence possible investigations by the Securities and Exchange Commission that will surely drag Chinese stocks on U.S. exchanges down more.

And indeed, the stock of Renren — which had its own controversial issue with accurate data reporting at the time of the IPO of the social networking site earlier this year — declined 13 percent Friday, along with other Chinese companies listed here.

First off, let’s get this out of the way:

No, Groupon has no current plans to pull its IPO, nor has it considered it as yet, even though its delays — not uncommon — get copious negative press. Though it certainly might in the future.

Yes, the Chicago-based social buying service is still growing more strongly than most start-ups and is expected to become profitable on an operating basis within the next month.

No, the Groupon board has not discussed jacking its CEO and co-founder Andrew Mason — I get a tip email on this on a daily basis — but it will also not be hiring another COO to replace the second one it has lost in a year.

And, finally, yes sirree, many of the recent kerfuffles that Groupon has found itself in most certainly could have been better handled by Mason and that board, who have presided over one the rockier and more cloddish IPO rides in recent memory.

In fact, has there ever been a tech start-up that has attracted more negative attention from the media than Groupon?

Maybe Amazon back in the day when it was being called Amazon.bomb? Or perhaps the early years of Facebook, when questionable origins, executive shifts and constant privacy snafus created worry around the leadership of CEO and co-founder Mark Zuckerberg?

But, as it has turned out, both have paled in comparison to the trials and tribulations of Groupon, which came out of nowhere like some kind of Internet comet and now is being widely pilloried as a flash in the pan.

Whether that’s fair criticism or not will be up to investors as the company continues its march to a public offering, which sources close to the company say will not be pulled unless the markets tank drastically.

That’s despite three amended S-1 regulatory filings by Groupon that corrected controversial accounting treatments that the company was using.

One, called Adjusted Consolidated Segment Operating Income, or ACSOI, was attacked because it left out key marketing expenses. While Groupon said it was an important metric to judge the performance of various cities as they were rolled out, the Securities and Exchange Commission and many others thought it caused more confusion than clarity.

The other financial term under scrutiny: The naming of gross billings, which is what Groupon pays out to merchants, as gross revenues. No longer, with the latest amendment to its S-1 filing; Groupon becomes instead a net revenue reporter for its daily deals business.

The change reduced reported revenue for 2010 from $713.4 million to $312.9 million.

Also added in were parts of the controversial letter CEO Andrew Mason sent to employees — defending all of Groupon’s financial practices and disclosures — presumably to reassure them in the wake of all the bad press.

While it displayed a lot of Mason’s signature humorous bravado, the move felt to me more like someone frustrated with being asked by current and potential employees if he were the Internet version of Bernie Madoff.

That’s ridonkulous, of course.

But the aggressive accounting, quick change from using those controversial financial metrics and chaotic breakneck growth that makes the company look like a house on fire certainly creates a picture of drama at a time when calm is probably the image they would like to portray.

Of course, losing two COOs — first, former Yahoo Rob Solomon after a year and then former Googler Margo Georgiadis after less than six months — in a row cannot help but increase the pressure. (And it cannot help Groupon’s image that Georgiadis went back to an even better job at the search giant.)

Sources said the company has no plans to hire another one, instead empowering Mason’s direct reports such as its CFO and others.

That said, while sources inside the company spin this as no big deal and can roll out plausible excuses for the COO departures — which mostly center around the execs being a “bad fit” — such movements always create worry.

In fact, this also happened to Facebook in its earliest days, when it seemed like an executive revolving door. That’s changed, of course, with the social networking giant looking like the digital Rock of Gibraltar in comparison.

A rock that has not been in any hurry to go public, which Groupon did perhaps too early in June — just about when all this bad news starting piling up, after more than a year of praise from the very same media.

I suppose, you live by it and you, well, get smacked upside the head by it.

But not damaged enough to pull the IPO, as yet, that is. One of the many reasons for sticking for now — such a move would result in yet another firestorm for Groupon.

Said one person I spoke to: “It would not matter what anyone said, no one would believe the company was anything but in trouble.”

And then, of course, the real trouble would start.

We’ll see what happens next, of course.

Groupon amended its public offering documents today, in a new filing with government regulators, in which it once again changed its accounting treatment.

That includes the way it measures revenue, which will now be reported excluding the money it pays out to merchants.

Some felt the “gross revenue” figure — a term for what are actually gross billings — was not reflective of Groupon’s true performance. It will now use net revenue.

Said the company in the current amended filing, its third:

“We consistently have stated that the amount we retain — rather than bill or collect — from the sale of Groupons is the key measure of the value we create. This change in presentation is consistent with that belief.”

Okkkkaaaay, whatever you say, but the change was requested by the Securities and Exchange Commission.

In its second amended filing, Groupon dropped its controversial “Adjusted Consolidated Segment Operating Income,” or ACSOI, metric, which excluded key marketing costs.

In its first amended filing, it told investors to ignore statements made by its Chairman Eric Lefkofsky and also made more accounting clarifications.

In the current changes, Groupon also posted the controversial letter to employees — first published here — that CEO and co-founder Andrew Mason wrote to strike back at the Chicago-based social buying network’s critics. Many felt the missive violated the quiet period before an IPO that companies are required to maintain.

And Groupon has been anything but quiet, as it advances and retreats to its Wall Street road show, which has been delayed and then not delayed (and might still be delayed, but who knows?).

Also today in its noisy goat rodeo: COO Margo Georgiadis is headed back to Google after arriving in April.

I guess things did not work out.

Lastly, the new filing also has added a new metric for “cumulative repeat customers,” showcasing how many customers have bought a Groupon offering more than once. That number is over 12 million.

Here is the full new S-1 filing to peruse and pick apart:

GRPN-20110923-S1A-0

Agents in the Federal Bureau of Investigation’s Washington field office and fraud prosecutors in the Justice Department’s Criminal Division are handling a criminal investigation, which has been under way for at least a year, according to people familiar with the matter. Attorneys at the Securities and Exchange Commission are also investigating for possible civil violations, these people said.

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To: Everyone

Re: The Memo

There was a whole lot of hubbub last week about an internal email that Groupon’s CEO and co-founder Andrew Mason sent out to the employees of the Chicago-based social buying company, which AllThingsD got hold of and published.

A lot of the noise centered less around the content of the memo — which sought to answer back at Groupon’s growing chorus of ever-noisier critics, who have been relentlessly pillorying the company over a range of financial issues since it filed for an IPO in June — than on the hows and whys of its release.

And, of course, whether the email would get Groupon into trouble with the Securities and Exchange Commission over whether Mason had touted the company in violation of regulatory disclosure rules.

News of that happening or not will come sooner than later, I suspect, but it is my impression that the very release of Mason’s defense of Groupon in a missive sent out to thousands of staffers — Hey, Henry, how is it that you didn’t get the memo? — says one clear thing about the sentiment of the company’s leadership.

And that is: They could not be more pleased at finally having their say and they couldn’t care less about anything other than being able to strike a blow against the withering attacks.

There are several reasons for this, according to many sources I spoke with this week about the fallout from the email, most of which center around the impact of the negative press on employee morale and the ability to attract new talent.

“It’s made it very difficult for those working at Groupon,” said one source. “But, worse, is how much our reputation is getting burned in the eyes of young engineers we need to recruit.”

What management at the company does not seem to be as worried about, said sources, is investor disinterest when it comes time to hawk and price the public offering.

While the general Wall Street turbulence might spell a lower valuation, sources said Groupon’s execs and board expect to be oversubscribed when it finally gets out on the market.

That’s why Mason — along with some detailed defenses of Groupon’s most controversial issues — tossed off gems like this one:

“For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals.”

Since I do happen to know about birthing babies (and Mason decidedly does not): Ouchie!

We’ll see soon enough exactly who will be feeling that pain.

Until then, here’s the classic didn’t-you-get-the-memo movie clip from the hilarious “Office Space”:

As All Things Digital reported last week, Groupon filed an amended S-1 IPO offering this morning, in which it deemphasized a controversial accounting method.

Instead of a metric called ACSOI, or adjusted consolidated segment operating income, the Chicago-based social buying company noted that gross profit was the “important indicator for our business, because it is a reflection of the value of our services to our merchants.”

But the dreaded ACSOI — which leaves out important costs of marketing — is not completely gone. In its filing, Groupon said it would use it internally, noting:

We exclude those costs because, unlike our other marketing expenses, they are an up-front investment to acquire new subscribers that we expect to end when this period of rapid expansion in our subscriber base concludes. While we track this management metric internally to gauge our performance, we encourage you to base your decision on whatever metrics make you comfortable.

In other words, for the love of Pete, please ignore ACSOI completely.

Groupon also included new financials in its filing for the quarter, with a 36 percent increase in revenue to $878 million from the previous quarter and double a year ago. But its loss was $102.7 million, compared to a loss of $35.9 million a year ago.

The company also reported that its subscribers grew from 10.4 million last year to 115.7 million now.

Costs are also lower by eight percent in the new quarter, with Groupon spending $165.2 on marketing to new subscribers, compared to $179.9 million in the previous one.

The filing with the Securities and Exchange Commission is a critical one for Groupon, whose public offering has been mired in questions about how it accounts for its financial performance.

Of particular concern: ACSOI, which is a number that does not include important costs, such as critical online marketing expenses to attract new customers to Groupon.

Such accounting is called non-GAAP (generally accepted accounting principles).

In 2010, Groupon reported that it lost $413.4 million using standard accounting practices. When it excludes some costs from its calculations using ACSOI — including online marketing expenses to attract new customers — it recorded a profit of $60.6 million in 2010.

The new results were stronger, to be sure. Such growth is important, especially given investor scrutiny of Groupon in the current economic turmoil.

As I wrote last week:

And, indeed, questions from the media, investors and, most importantly, the Securities and Exchange Commission about how Groupon accounts for its revenue and profits using ACSOI were swift and decidedly negative.

Hence, a furious debate — along with much internal tension — within Groupon about what to do. At first, in another S-1 amendment, the company backed away from using ACSOI as a “valuation metric.”

But that was apparently not enough for the SEC or anyone else, so Groupon’s top managers finally thought it best to rid itself of the term entirely.

Presumably, with a cleaner S-1, Groupon can concentrate on a whole new set of issues around its IPO, such as the tumultuous state of the markets.

According to numerous sources close to the situation and after regulatory pressure, Groupon will amend its S-1 public offering filing to remove references to an unusual accounting treatment that has attracted controversy.

Sources said the new filing by the social buying company, which is helmed by CEO and co-founder Andrew Mason (pictured above), will likely occur as early as Monday.

It can’t come a minute too soon regarding a metric called ACSOI, or adjusted consolidated segment operating income, which the Chicago-based Groupon used when it filed its S-1 documents in June.

As I wrote at the time about the odd use of ACSOI:

Let’s be clear, this is a number that does not include important costs, such as critical online marketing expenses to attract new customers to Groupon.

Such accounting is called non-GAAP (generally accepted accounting principles).

In 2010 and the first quarter of 2011, Groupon said its Adjusted CSOI was $60.6 million and $81.6 million, respectively.

On a GAAP basis, Groupon lost $413.4 million for 2010 and $113.9 million in the first three months of 2011.

And, indeed, questions from the media, investors and, most importantly, the Securities and Exchange Commission about how Groupon accounts for its revenue and profits using ACSOI were swift and decidedly negative.

Hence, a furious debate — along with much internal tension — within Groupon about what to do. At first, in another S-1 amendment, the company backed away from using ACSOI as a “valuation metric.”

But that was apparently not enough for the SEC or anyone else, so Groupon’s top managers finally thought it best to rid itself of the term entirely. That will happen next week, sources said.

And, in coming weeks, sources added, the company will be filing additional financial information about both its growth and costs, which will undoubtedly also be put under a microscope by the media, investors and regulators.

A Groupon spokesman declined to comment when asked about the removal of ACSOI from its public offering documents.

Earlier today, CNBC reported that the regulatory review of Groupon’s questionable use of certain accounting metrics in its IPO filing was delaying its offering until later in September.

While more questions from the Securities and Exchange Commission about how it accounts for its revenue and profits might indeed eventually push the IPO debut out, according to sources I have interviewed for months now, an offering in mid to late September was actually when the social buying company was planning to take its company public.

It makes sense, since August is seldom used for road shows for companies headed for an IPO — think Wall Street in the Hamptons and you’ll get why.

That said, the continued scrutiny by the SEC is not a welcome development for Chicago-based Groupon, which filed its S-1 documents in June.

In coming weeks, sources said, the company will be filing new financial information about both its growth and costs, which will undoubtedly be put under a microscope by investors and regulators.

That’s no surprise since the contents of the original filing immediately caused controversy, especially over the amount of its venture funding paid out to insiders and also over an unusual accounting treatment called adjusted consolidated segment operating income, or Adjusted CSOI.

As I wrote at the time:

Let’s be clear, this is a number that does not include important costs, such as critical online marketing expenses to attract new customers to Groupon.
Such accounting is called non-GAAP (generally accepted accounting principles).

In 2010 and the first quarter of 2011, Groupon said its Adjusted CSOI was $60.6 million and $81.6 million, respectively.

On a GAAP basis, Groupon lost $413.4 million million for 2010 and $113.9 million in the first three months of 2011.

Said Groupon about its accounting in its S-1 filing: “We believe Adjusted CSOI is an important measure of the performance of our business as it excludes expenses that are non-cash or otherwise not indicative of future operating expenses.”

Definitely sketchy enough to attract an SEC look-see, which caused Groupon to back away from Adjusted CSOI as a “valuation metric” in a recently amended S-1 filing. Groupon also stepped back a sloppy comment made after the filing by its Chairman Eric Lefkofsky — in a interview he apparently thought was off the record — that the company would be “wildly profitable.”

One thing is certain: There will surely be more amending of the Groupon S-1 in the weeks ahead as it stumbles toward its IPO, which will be one of the most prominent of the Web 2.0 era.

When it goes public, the Facebook game developer will be the first major U.S. company supported primarily by the sale of virtual goods to do so.

To get an idea of what such an animal might look like, I talked to a handful of accountants, lawyers and game companies to get a sense of what we might find under the hood.

What’s immediately clear is that there are no obvious answers.

The Securities and Exchange Commission and other governing bodies have not yet come up with a legally prescribed method for taking into account the sale of virtual goods.

That leaves companies to come up with their own best guesses.

“There are no rules about this stuff,” said Bob Komin, the CFO and COO at Linden Lab, which operates Second Life, the four-year-old online virtual world. “I haven’t heard anything about a standard, but it’s probably the number one thing we talk about before we get audited every year.”

Revenue recognition on the sale of virtual goods is not exactly a sexy topic (unless we’re talking about an avatar’s undergarments!). But as more companies shift to a free-to-play model, where games are monetized through microtransactions and virtual goods, the subject will become more commonplace.

Zynga may be the first out of the gate, but many others are waiting in the wings — Facebook being the most prominent. Zynga declined to comment for this story.

Here’s what is known about Zynga

Four of its titles dominate the most popular applications on Facebook: CityVille (No. 1); FarmVille (No. 2); its newest title, Empires & Allies (No. 3); and Zynga Poker (No. 4).

All of those games are free and monetized through the sale of virtual goods, such as purple cows, energy boosts, clothing or premium buildings.

In-game items like these are either purchased directly on Facebook or through gift cards purchased in the store. Zynga also makes money from advertising and mobile games, but revenues from those are presumed to be far less.

In total, Zynga reportedly generated about $400 million in profit last year on about $850 million in revenue, although subsequent sources told AllThingsD’s Kara Swisher that the filing will reveal much more robust numbers.

But it’s not the sheer magnitude of Zynga’s business that has created problems for bean-counters. It’s the details on how to account for every last penny.

In a white paper, accounting firm Ernst & Young writes that there are three typical models being used today.

Here’s how they break it down:

• Game-based model: The company recognizes revenue over the life of the game.
• User-based model: Revenue is recognized over the estimated life a user plays the game.
• Item-based: Revenue is recognized based on the implied or explicit life span of the item — in other words, how long it would last in the real world. Examples of more durable goods are virtual vehicles, furniture or weapons. Revenue from these would be recognized for as long as the player stays active in the game. Revenues from a more consumable item, like a virtual cup of coffee or a jolt of energy, would be recognized almost immediately.

And there are still other factors to take into consideration, such as whether the goods were paid for with virtual currency or real cash, and how much information a company has for establishing the averages.

Lack of rules won’t stop companies from filing to go public

It can get really confusing really fast.

Kirk Soderquist and J. Dax Hansen, attorneys at Perkins Coie in Seattle, are looking at the legal ramifications of virtual goods.

“You have a bunch of alternative financial services companies that have sprung up on the Internet around social networks and gaming because there’s a need to deal with money in an innovative way. But the laws aren’t clear on how they apply to the Internet and the gaming space,” Hansen said.

Despite the lack of clear regulations, they said, they don’t believe that’s keeping any companies from filing for a public offering.

The one major aspect for a company to consider is unclaimed property laws. If a user purchases credits or coins but doesn’t use them, a company can’t necessarily set an expiration date and count them as revenue. In many states, it is considered “unclaimed property” — like an unused gift card — and the government can collect the revenue.

“Investors and acquirers will be interested in how you deal with that,” Hansen said. “If they are dependent on breakage for their business model, then they have another think coming.”

Linden Lab recognizes revenue over three years

Linden Lab’s approach for Second Life most closely resembles user-based accounting, which recognizes revenue over the average lifespan of a player, which is three years.

That time frame was picked, Komin said, because players tend to stick around for two to four years. “So, three years is not a bad estimate,” he said.

Komin prefers the long timeline because it evens out the revenues, making the company look like it has a very predictable and recurring business model. “If you have recurring and repeatable revenues over three years, it means that even if you are growing really fast, your reported numbers would be growing less quickly, but it would be more predictable. The other far extreme would be to report everything in the current period, and you’d see the growth as it was happening — but it would be more volatile.”

In other words, if Zynga does the same thing and reports FarmVille revenues over more than the two-year period it has been popular and revenues from Poker over three-plus years, revenues will be very consistent and not reveal much in terms of how well its games are currently performing.

Likewise, sales won’t spike when they release a new title, like Empires & Allies — which has jumped from the seventh most popular game to the No. 3 spot in the past week, according to AppData.com.

The iPhone is an example of the two accounting models

A good example for this is how Apple originally accounted for its iPhone.

When the first iPhone came out, Apple used subscription-based rules to account for the revenue. That meant that sales from the iPhone were spread out over many months, rather than right after a customer bought the phone. Wall Street analysts found the practice annoying because the company’s revenues barely budged despite selling two million devices in one quarter.

Apple was forced to report it this way because it technically wasn’t selling a finished product. Over the life of the product, Apple planned to push down free updates to the device. (This is also why Apple once charged for iOS updates for the iPod touch, so it could recognize all revenue immediately.)

The laws have since changed.

“Apple is a great analogy,” Komin said. And just as Apple figured it out over time, “I think there will be some adjustment as people figure [virtual goods] out.”

To be sure, Komin has his preferences for how he wants to do it, as the company considers an IPO.

“Generally speaking, investors don’t reward you for volatility,” he said. “Recognizing revenue that matches [a user's] life cycle feels better than recording it immediately. But whichever way we go, and whichever we choose to do, we have to make sure investors understand the business.”

Whatever Zynga decides, investors (and journalists!) will thank it for being transparent.

It has only just announced its IPO plans, but Groupon is already getting a bitter taste of the brutality of being more public in an increasing series of negative reports aimed at its business prospects and execs.

That has included a spate of posts after it filed to go public last week about the unusual accounting treatment in an S-1 regulatory filing for the offering, which also showed a large outflow of its venture funding to the pockets of the Chicago-based social buying site’s founders.

Since then, though, the gloves seem to be off for Groupon, just as it starts to market itself to Wall Street investors.

Perhaps the toughest so far has been one written by Fortune’s Kevin Kelleher, painting a very sketchy investing portrait of the company’s Chairman and co-founder Eric Lefkofsky.

Wrote Kelleher in a piece titled “The Checkered Past of Groupon’s Chairman”:

But Groupon’s IPO has brought an uncomfortable spotlight onto Lefkofsky. While some attention focuses on his ambitions as an investor in tech start-ups, others see a “spotty history” and draw parallels between the past and the present. Lefkofsky’s track record, reflecting failures and successes, bears certain hallmarks: Rapid revenue growth accompanied by big losses, a penchant to sell stock early on, and lawsuits filed by investors, lenders or customers who feel they have been wronged.

Ouch.

While one of the lawsuits mentioned in the piece was dismissed with prejudice, it did not help that the piece included an early email used in the case, written by Lefkofsky in the Web 1.0 era, that read in part:

“Lets start having fun…lets get funky…let’s announce everything…let’s be WILDLY positive in our forecasts…lets take this thing to the extreme…if we get wacked [sic] on the ride down-who gives a shit…THE TIME TO GET RADICAL IS NOW…WE HAVE NOTHING TO LOSE…”

Double ouch, even if it is probably a bit unfair to use such rookie remarks from a young entrepreneur back then to reflect on him today.

Still, Lefkofsky — whom I met with recently at Groupon’s HQ and found as whip-smart and savvy as any Silicon Valley sharpie — does seem to need to be more circumspect in his utterances today.

Most specifically, the day after its IPO filing, he told Bloomberg in an interview that Groupon will be “wildly profitable,” referencing worries about losses unveiled in its financial statements and his past record of start-ups.

Said Lefkofsky on June 3:

“I’m going to be in technology for a long time. I’m going to start a lot of companies. These are not sham companies. These are great businesses. InnerWorkings is profitable. Echo is profitable. Groupon is going to be wildly profitable.”

While sources said it is unlikely that Groupon will be forced by the Securities and Exchange Commission to make a new filing due to the remarks, it’s just the kind of mistake the typically voluble company needs to avoid going forward.

In other words, no more words from Groupon.

Zynga is poised to file for its initial public offering, according to sources close to the situation.

The filing with the Securities and Exchange Commission could come as early as this week, or next week at the latest.

The move is not entirely unexpected, given how well the recent IPOs of several Internet companies have done recently, including business networking site LinkedIn last week and Russian search giant Yandex today.

Their strong performances show the huge investor appetite for fast-growing and high-profile Web 2.0 firms. Wall Street is also prepping for eventual public offerings from social buying site Groupon and, the big fish, Facebook.

Zynga’s valuation in its last round of funding was $10 billion, but it is likely to price itself higher in an offering.

After all, LinkedIn now has a market valuation of $9 billion, double its pre-IPO price.

Whatever the price, a Zynga IPO is a major coup, especially given how quickly it has morphed into one of the most important forces in online gaming, largely via distribution on the Facebook platform.

The company claims that it has 250 million people actively playing its games every month. Its largest game currently is CityVille, which attracts 90 million monthly users, reports AppData. Its original Poker game still manages to attract 35 million monthly users.

Its early titles, such as FarmVille and Mafia Wars, first vaulted the San Francisco-based company into consumer prominence, and it has recently struck a number of high-profile branding deals with Lady Gaga and the makers of the upcoming animated movie “Kung Fu Panda 2,” among others.

That’s also meant a solid business. Zynga reportedly generated about $400 million in profit last year on about $850 million in revenue, although sources said the filing will reveal much more robust numbers.

The company has also grown its work force quickly. Last year, Zynga hired more than 800 people and today has more than 1,500 full-time employees in 13 offices, spanning six countries.

Recently, at the opening of its new Seattle office, its founder and CEO Mark Pincus–who has tried to hit the start-up jackpot many times before–said he had Amazon-sized ambitions for Zynga, referring to that city’s online retail giant.

Depending on how the offering goes, he might want to think bigger.

Sources said Goldman Sachs will be among the lead bankers in the Zynga offering.

Zynga declined to comment on its IPO plans.

The company, which is set to price Wednesday night and begin trading on the New York Stock Exchange under the symbol LNKD on Thursday, had originally set out to sell 7.84 million shares at $32 to $35 apiece. In an updated filing with the Securities and Exchange Commission Tuesday morning, the company set the range at $42 to $45.

While companies sometimes raise their price ranges by as much as $3 to $4, a $10 increase is very uncommon. It’s a clear sign that investors are jockeying for shares ahead of the offering and are willing to pay far more than the company was originally asking in order to get a piece of the IPO.

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The world’s largest electronics retailer by sales issued its strategic plan in a filing with the Securities and Exchange Commission on Thursday ahead of its annual investor day. Best Buy, which reiterated its fiscal 2012 outlook, said it hopes to double its current $2 billion online business within three to five years and expects a 10% reduction in U.S. “big box” store square footage in the same timeframe.

The company also said it’s aiming to operate 600 to 800 Best Buy Mobile stand-alone stores in the U.S. within five years.

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The review by the Securities and Exchange Commission, disclosed in a letter to a lawmaker, could fuel the fast-growing market in private shares of technology firms such as Facebook Inc., Twitter Inc. and Zynga Inc. The steps under consideration would help such privately held companies raise more money without incurring the increased reporting and other requirements of becoming a public company.

According to the letter and people familiar with the matter, the likely changes would include raising from 499 the number of shareholders private companies can have without being required to open their books, and also making it easier for such companies to publicize share offerings.

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In a regulatory filing Friday with the Securities and Exchange Commission, Google said Chief Financial Officer Patrick Pichette received a $2.7 million bonus and equity valued at $15 million under the company’s executive bonus plan in recognition of his contributions to Google’s financial performance last year.

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