Facebook shares extend post-IPO slump

New York: Facebook shares extended their slump after a much-hyped public offering earlier this month, shedding more than seven percent as markets reopened following a US holiday weekend.
In midday trade, Facebook slid 7.4 percent at $29.56, or down more than 20 percent from its offering price of $38 on May 18. Another report said Facebook was considering the acquisition of Opera, the Norwegian-based maker of browser software that is widely used on mobile devices.
A series of lawsuits have been filed against Facebook and its underwriters claiming key information about the company's outlook was withheld from investors ahead of the IPO. The market action came amid reports that Facebook was preparing to launch its own mobile phone, apparently as part of a strategy to get more revenues from the mobile space.
The New York Times cited unnamed sources, including Facebook employees, suggesting that the network had been hiring several smartphone engineers.
Facebook recently admitted it was struggling to make money out of its growing mobile audience. The company, which recently floated on the stock market, has also just launched its own mobile app store.
The App Center currently offers links to Facebook-enabled apps within Apple's iOS and Google Android stores but developers will soon be able to write apps to be placed exclusively in Facebook's store.
According to the New York Times, Facebook has hired experts who worked on the iPhone and other smartphones.
Meanwhile, Opera Software would cost Facebook over $1 billion as competition from Google and others could push up the price tag, analysts said on Tuesday, as takeover talk pushed the shares up as much as 26 percent yesterday.
Oslo-listed Opera, coveted for its advanced mobile phone software technology, would be a perfect fit for Facebook but the firm's business is also vital for some of the industry's biggest players so any bid is likely to attract others to the table.
"Opera would be sensible for Facebook on several levels," Arctic Securities said.
"It would enhance the now limited mobile experience of Facebook, improve Facebook's mobile monetization problem, help Facebook retain online game developers leaving the social network over the lack of a mobile platform and further improve Facebook's ability to target ads."
Opera makes various web browsers that work across an array of platforms including mobile phones, tablets, PCs, and TVs.
The software is available on most phones, including the iPhone and the BlackBerry, and works on various operating systems, including Android, giving Opera the reach Facebook is seeking.
The browser can compress data by as much as 90 percent, saving consumers on data charges, and has the technology to better display ads, a key factor for Facebook which has struggled to convert its rapidly increasing traffic from mobile platforms to revenue. Opera, which has about 200 million Mobile and Mini subscribers, has also built a significant market share in key emerging markets, such as India, Brazil and Asia, where Facebook has been generally weak. It would be such a perfect fit for Facebook, analysts said it would have to pay a hefty premium.
DNB, Norway's top bank, said the price would have to be double Friday's closing level, or 68.6 crowns, valuing the firm at $1.35 billion, while Danske Bank and ABG Sundal Collier both predicted a price between 50 and 60 crowns a share, or between $1 billion and $1.2 billion.
At 1139 GMT, the stock traded up 17.2 percent at 40.2 crowns a share, valuing the firm at around $800 million. Opera officials have repeatedly declined to comment.
FROM: AGENCIES