Facebook Inc., the social-networking website that in eight yearschanged the way the world communicates, filed to raise $5 billionin the largest Internet initial public offering on record.

Facebook, whose meteoric rise spawned an Oscar-winning film andcaptivated Wall Street, yesterday named Morgan Stanley as the leadunderwriter on the IPO, while reporting a 24-fold increase in salesover the past four years to $3.71 billion in 2011.

The planned IPO dwarfs Google Inc.'s 2004 offering and testswhether social-networking providers deserve market values thatrival such established companies as McDonald's Corp. andCaterpillar Inc. The Menlo Park, California-based company isconsidering a valuation of $75 billion to $100 billion, people withknowledge of the matter said last week.

“The $100 billion valuation that's being tossed around just putsit at a level we've never seen,” said Jeffrey Sica, chiefinvestment officer of Morristown, New Jersey-based Sica WealthManagement LLC, which oversees $1 billion. “They have to be able toshow that not only do they deserve to be at that level, but theyhave multiple channels to create new revenue.”

Co-founded in 2004 by then 19-year-old Mark Zuckerberg, Facebookhas grown into the world's dominant social-networking site,squelching competitors such as MySpace Inc. with its more than 800million users. While Facebook's sales almost doubled last year, thecompany faces increasing competition from rivals such as Google,which debuted its own social-networking service last year, andshort-message social site Twitter Inc., the filing shows.

A $100 billion market capitalization would value Facebook at26.9 times trailing 12-month sales, more than double Google'svaluation when the search-engine operator went public in 2004.Facebook recruited Chief Operating Officer Sheryl Sandberg, aformer Google executive, in 2008 to help expand the companyglobally.

Facebook didn't specify the number or price of shares it willoffer, and the $5 billion amount is a placeholder used to calculatefees and may change. The U.S. Securities and Exchange Commission'spublic website suffered a slowdown yesterday as traffic surged,forcing the agency to bring on additional capacity, according tospokesman John Nester.

Facebook Bankers

The stock would trade under the symbol FB on either the NasdaqStock Market or the New York Stock Exchange. The company plans touse the proceeds for working capital and other general corporatepurposes.

In addition to Morgan Stanley, Facebook hired JPMorgan Chase& Co., Goldman Sachs Group Inc., Bank of America Corp.,Barclays Plc and Allen & Co. to manage the IPO.

Net income last year surged by almost two-thirds to $1 billion,the filing showed. Last year, Facebook said it expects U.S.regulators to require that it disclose financial results by April30, 2012, if the company hadn't gone public by then. Facebookdecided to wait until 2012 for its IPO to give Chief ExecutiveOfficer Zuckerberg more time to gain users and boost sales, peoplefamiliar with the matter said in 2010.

Zuckerberg, 27, is the company's top holder with 28.4 percent ofthe shares, the filing shows. He also has proxy agreements withfellow stockholders that potentially give him voting control overmore than half the shares.

At the $100 billion market value, Zuckerberg's stake would beworth $28.4 billion, making him richer than Google's co-foundersand almost on par with Oracle Corp. founder Larry Ellison. Google'sSergey Brin and Larry Page are each worth more than $15 billionbased on their ownership of that company's shares. Ellison, 67,owns stock worth about $31 billion in Oracle, the software companyhe started in 1977.

Accel Partners remains the top outside stakeholder with 11.4percent of the investor votes, while Dustin Moskovitz, one ofZuckerberg's co-founders, holds 7.6 percent voting power.

Facebook would follow a crop of social-media companies that wentpublic in 2011, the biggest year for U.S. Internet IPOs in morethan a decade, according to Bloomberg data. Nineteen companiesraised $6.6 billion in 2011, the most since 101 raised $11 billionin 2000, the data show. Professional-networking site LinkedInCorp., music-streaming service Pandora Media Inc., daily-deal siteGroupon Inc. and social-gaming company Zynga Inc. all sold shareslast year.

Risk Factors

In outlining its potential risks in the filing, Facebook citedhacker attacks, regulatory scrutiny, a shift to mobile technologyand rivals such as Google+. The company also said it would facecompetition in China if it manages to gain access to that market,where its site is currently blocked.

Facebook is increasing its focus on mobile technology to takeadvantage of the shift to smartphones and tablets. It expects itsnext 1 billion users to come mainly from mobile devices, ratherthan desktop computers.

The company made at least 10 acquisitions in 2011, includinggroup-messaging service Beluga in March. In addition to buyingstartups, Facebook has enabled hundreds of others to get off theground by offering an easy, cheap and fast way for them to reachmillions of potential customers, said Shervin Pishevar, a managingdirector at Menlo Ventures in Menlo Park, California.

“There will be a lot of $1 billion-plus companies built on theseplatforms,” said Pishevar, who owns Facebook shares.

Venture firm Accel Partners first led a $12.7 million investmentin Facebook in 2005. Other investors include Microsoft Corp. andPayPal co-founder Peter Thiel, as well as Greylock Partners.

As the site's popularity grew, banks, hedge funds and mutualfund companies started buying stock. In January 2011, Facebook saidit raised $1.5 billion in a financing round led by Goldman Sachsthat valued the company at $50 billion. Goldman Sachs, fundsmanaged by the firm, and Digital Sky Technologies bought $500million of stock, while Goldman Sachs offered $1 billion of sharesto non-U.S. clients.

While Facebook has steadily added users since its creation, ithas faced increased scrutiny over its protection of user data. InNovember, the company agreed to settle privacy complaints with theFederal Trade Commission. The move may help allay criticism that itdoesn't do enough to shield the information it prods users intosharing.

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