Facebook market makers' losses- $100 million

A CLAASIC EXAMPLE THAT CAN TAKE PLACE (HAPPENED)....EVEN IN MOST ADVANCED COUNTRIES....

AFTER ALL PEOPLE ARE PEOPLE.. WITH EMOTIONS BUILT....

MONEY MAKES THE WORLD...MACHINES ARE MADE BY MEN/WOMEN....

SO CONCLUSION IS SIMPLE...ALWAYS ACHIEVE..DETERMINED TO MAKE.... 
.........GURUS...MASTERS..OR FOR THAT MATTER "MARKET MAKERS"............SHALL
NEVER TRY TO MISS THE OPPERTUNITY  .........NEVER OPPERTUNITY MISSES...

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Facebook market makers' losses total at least $100 million
May 24, 2012 11:03 PM ET.
By Jessica Toonkel and John McCrank

(Reuters) - Claims by four of Wall Street's main market makers against Nasdaq over Facebook's botched IPO are likely to exceed $100 million, as they and other traders continue to deal with thousands of problems with customer orders.
A technical glitch delayed the social networking company's market debut by 30 minutes on Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped. The exchange operator is facing lawsuits from investors and threats of legal action from brokers.

Four of the top market makers in the Facebook IPO -- Knight Capital, Citadel Securities, UBS AG and Citi's Automated Trading Desk -- collectively have probably lost more than $100 million from problems arising from the deal, said a senior executive at one of the firms.
Knight and Citadel are each claiming losses of $30 million to $35 million, potentially overwhelming a $13 million fund the exchange set up to deal with potential claims.Nasdaq also has to contend with the outside prospect that it could lose the Facebook listing entirely after having just obtained it.
Facebook shares ended regular trading on Thursday up 3.2 percent at $33.03, about $5 short of their offering price. Action on the stock, however, has essentially become secondary to the fallout from the IPO -- its price, its size, its execution and questions about selective disclosure of its financial prospects.
Regulators including the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority and Massachusetts Secretary of the Commonwealth William Galvin are now looking into how the IPO was handled. The U.S. Senate Banking Committee is also reviewing the matter.
BROKERS UP IN ARMS
Advisers familiar with the situation said many investors are now finding out, nearly a week after the fact, that their orders were not executed at the prices they thought.
Fidelity, in a statement, said it was working with regulators and market makers on its clients' issues "and we will continue to do so until we are confident that Nasdaq has done everything it can to mitigate the impact to our customers."
Morgan Stanley is also still tending to trade orders placed by brokerage customers on Friday, two people familiar with the situation said. Nasdaq has said all orders were returned by 1:50 p.m. EDT last Friday, but a Morgan Stanley Smith Barney source said it did not get trade information in a "systemic, orderly way.
Late Thursday, the company held a call with its brokers and told them adjustments would be made to thousands of trades so that no limit orders would be filled at more than $43 a share for stock from the IPO day, a person familiar with the call said.
While brokerages may have received confirmation of trades made on Friday, many were still handling customer disputes over what price they received on the trades, officials said.
The question is "who is going to eat the cost" of compensating those investors, said Alan Haft, a financial adviser with California-based Kings Point Capital LLC, which has $200 million in assets.
One prominent plaintiffs lawyer said what happened with Facebook was reminiscent of the dot-com bubble.
"This is just another spin on the same game of unfair treatment of individual investors," said Stanley Bernstein of Bernstein Liebhard. He chaired the plaintiffs' committee in an IPO class-action suit challenging the role of investment banks in more than 300 IPOs between 1998 and 2000. The litigation ended in a $586 million settlement in favor of the plaintiffs.
MARKET MAKERS LOOM
The claims by market makers Knight and Citadel could end up dwarfing some of the brokerage issues, though."They are certainly facing the specter of some significant lawsuits if this pool is not enough," a source familiar with Knight's situation said of the Nasdaq claims pool.
Citadel has sent its losses to Nasdaq for potential compensation, a source familiar with the matter said. Citadel's hedge fund was not affected.
The head of trading at Instinet said it still had no idea when Nasdaq would respond to requests for accommodation -- essentially, compensation for the order problems -- or if those requests would be honored.
"Were gonna be looking at a loss on our books" if Nasdaq does not honor the requests, Mark Turner said. "We basically made most of our clients whole because Nasdaq told us to go through the process and file for accommodation. If Nasdaq does not accommodate us we're going to end up taking a loss."
"I don't know that I want to put a dollar amount on that but it's not nearly as significant as Knight's ($30-$35 million)," he said.Citadel and Knight, as market makers to the Nasdaq, honor their clients' buy, sell and cancellation orders. The orders are supposed to be processed by the exchange within milliseconds, but there was a nearly two-hour delay in processing Facebook orders at the Nasdaq.
During that time, market makers had no idea where their orders stood. And in reality, the price clients bought or sold at was sometimes different than the price they actually got.
For example, Facebook shares began trading with an opening cross price - the first price at which those not in on the IPO could buy or sell - of $42 per share. If an order to sell 10,000 shares at $42 went in at that time, but wasn't filled until later in the day when shares were trading at around $39, a market maker like Citadel or Knight would make up the difference - in this case, at a cost of $30,000.
FEWER PROBLEMS ELSEWHERE
Several analysts who cover exchanges said Nasdaq's legal liability should be limited, though. According to the analysts, securities rules give Nasdaq wide discretion in determining what, if any, compensation it should pay to customers who claim that they suffered losses due to trading execution.
Under exchange rules, Nasdaq's liability regarding client losses from certain trading issues is limited to $3 million a month. Market makers will be arguing that Nasdaq was so grossly negligent that its actions during the IPO opening override the limits, said a source with knowledge of Knight's situation.
Other firms said they did not have similar problems to those of Knight, raising questions about the scope of the losses."The problems were where people were trying to cancel orders; we didn't have that," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "Because we didn't have a problem doesn't mean there weren't problems."
E*Trade Financial Corp said its market making operations realized losses of "well under a million dollars."
Charles Schwab Corp had a "small number" of the "tens of thousands of clients" who traded Facebook whose issues still have not been resolved, a spokesman said. "Each one requires some analysis to resolve, which can be time consuming."Shares of Nasdaq fell 1 cent to $21.80 on Thursday. As of Thursday's close the stock was down 5.2 percent from its last close before the Facebook debacle. Over the same period NYSE Euronext is down just 0.1 percent.
The slide in the shares is adding to the pressure on Nasdaq Chief Executive Robert Greifeld, who defended the exchange's performance at its annual meeting last Tuesday.
(Additional reporting by Jed Horowitz, Erin Geiger Smith, David Randall, Edward Krudy, Suzanne Barlyn and Jonathan Stempel in New York, Tim McLaughlin in Boston, Dan Levine in San Francisco and Ashutosh Pandey in Bangalore; Writing by Ben Berkowitz in Boston; Editng by Steve Orlofsky)
(c) Copyright Thomson Reuters 2012. Check for restrictions at: http://about.reuters.com/fulllegal.asphttp://money.msn.com/business-news/article.aspx?feed=OBR&date=20120524&id=15152091

ONE CEO = 3,489 years for worker

Top CEO pay equals 3,489 years for typical worker
May 25, 2012 6:06 AM ET. By SETH BORENSTEIN
WASHINGTON (AP) - David Simon of Simon Property received a pay package worth more than $137 million for last year, and the typical CEO took home $9.6 million, according to an analysis by The Associated Press.
Here are some ways to think about just how much money those salaries represent.
Simon's $137 million is almost entirely in stock awards that could eventually be worth $132 million. The company said it wanted to make sure Simon wasn't lured to another company.
HOW LONG IT TAKES OTHERS TO MAKE THAT MUCH: A minimum wage worker — paid $7.25 per hour, as some workers at Simon malls are — would have to work one month shy of 9,096 years to make what Simon made last year. A person making the national median salary, $39,312 by AP calculations, would have to work 3,489 years.
BY THE HOUR: Assuming Simon worked a 60-hour week, his pay was $43,963.64 per hour, or $732.73 per minute. To put that in perspective, the minimum-wage worker would have to labor for nearly three years to make what Simon earns in an hour. The average U.S. worker makes slightly less in one year than Simon makes in an hour.
COMPARED WITH AMERICA'S CEO: Simon makes about 342 times the $400,000 annual salary of President Barack Obama. In fact, if you add the salaries of Obama, Vice President Joe Biden, the Cabinet, the Supreme Court justices, all the members of the Senate and House of Representatives and all 50 governors, it is less than $110 million, so Simon makes well more than government's top 600 leaders. In the past 100 years, U.S. taxpayers have paid a total of $80.6 million, adjusted for inflation, to presidents from Woodrow Wilson to Obama.
The median CEO salary of $9.587 million:
HOW LONG IT TAKES OTHERS TO MAKE THAT MUCH: A minimum wage worker would have to work 636 years to make that much. A person making the national average salary would have to work 244 years to make the median CEO salary.
http://money.msn.com/business-news/article.aspx?feed=AP&date=20120525&id=15152842

THINK THE FALLOUT- EURO EXIT---GREECE

THINK THE FALLOUT, WHAT COULD THE REPERCATIONS....TO THE WORD ECONOMY...
THE FEAR HELPS TO SHORT THE MARKETS ON SHORT TERM...THEN TRAP THE LAZY LEAST INFORMED RETAIL HEARD...ENJOY THE FEAST ON SHORT COVERING.....



European Banks Unprepared for Greek Exit From Euro
By Elena Logutenkova, Liam Vaughan and Gavin Finch - May 23, 2012 3:32 PM GMT+0530
Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro.
While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising defaults in other indebted euro nations
“A Greek exit would be a Pandora’s box,” said Jacques- Pascal Porta, who helps manage $570 million at Ofi Gestion Privee in Paris, including shares in Deutsche Bank AG (DBK) and BNP Paribas SA. (BNP) “It’s a disaster that would leave the door open to other disasters. The euro’s credibility will be weakened, and it would set a precedent: Why couldn’t an exit happen for Spain, for Italy, and even for France?”
The prospect of Greece leaving the 17-nation euro region increased after parties opposed to the terms of the nation’s second bailout by the European Union and the International Monetary Fund won most of the votes in May 6 elections. A fresh round of voting will be held June 17 after politicians failed to form a government. For the first time since the crisis began in November 2009, European leaders and central bankers are speaking openly of Greece abandoning the currency union.
http://www.bloomberg.com/news/2012-05-22/european-banks-unprepared-for-pandora-s-box-of-greek-exit.html

IT IS VERY LIKELY THAT THE WORST MAY NOT HAPPEN ON JUNE 17TH BUT THE FACT IS....LIFE IS ALWAYS CHALLENGING TO STOCK MARKT TRADERS......

WIPRO- GE- VIVEK- LESSONS

From Wipro to KineticGlue: Vivek Paul shares his entrepreneurial journey and the learnings from it Peerzada Abrar, ET Bureau May 18, 2012, 03.00PM IST
Vivek Paul, 53, led the medical equipment business for GE in India and helped Wipro grow from $150 million in revenues to a $1.4-billion global firm. He also founded Akansa Capital, and was a partner at TPG, a leading private equity investment firm.
After a decade of building businesses for others, Paul decided to launch an entrepreneurial venture, KineticGlue -- a social platform for companies to engage their people and find solutions. In an interaction with Peerzada Abrar, Paul, who is also a consulting professor of radiology at Stanford University, narrated his entrepreneurial journey and the learnings from it. Excerpts
Keep your own counsel
Before I joined Wipro, I used to run GE's global CT scanner business. I made a big bet on a breakthrough technology while at that job.
Everybody I asked for advice told me not to venture into it. I listened to their reasons. I then gave a solution to every reason that was raised. By doing this, I became confident. What I learnt most through this was that you can seek suggestions from everybody, but keep your own counsel.
Envision the future
My stint at Wipro taught me to envision the future. This is not because you want to live in a fantasy land. You can actually work backwards to figure out what you need to do today to build that future.
You also need to inspire others. It is not enough that only you have this belief. Everybody else needs to have that belief. It is not just empty words. You need to translate this into action.
Plan for success
Another lessons that I learnt was to plan for success, as much as for failure. When success comes your way, you should not feel that you were not ready for it -- that your system cannot match that scale, or you were not able to figure out how to hire so many people while retaining the company culture. It is about making sure that when success does smile your way, you are ready for it.
Perseverance
I used to work for GE and came to India to set up a JV with Wipro as a partner, which over time became the largest exporter of electronic goods from India. Just after we started in 1990, India ran out of foreign exchange.
We had no way to import or pay for any components or make any product. We seriously thought about changing the company name from Wipro-GE to Wipro-Ghee, so that we could sell something. What I learnt from this was that there was no such thing as 'steady progress', that life is non-linear.
So, you can't say that this did not happen yesterday. If so, tomorrow is lost. The entrepreneurial world is such that you have to stay at it. Perseverance is the key.
Resolute faith
At KineticGlue we learnt that starting in a space where you are one of the first players is hard. Industries grow faster than individual companies.
Secondly, we learnt that though we started out by targeting large companies in India, we learnt that small and medium enterprises was our big market.
I believe enterprise social media is going to change the way all organisations are structured. There will be many dark days and the only thing that is going to pull you through those dark days is resolute faith that you are on to something big.
THANKS TO ET

RUPEE DEPRECIATION...EFFECT

http://www.thehindubusinessline.com/industry-and-economy/article3436641.ece?homepage=true

                                    

Facebook: Zuckerberg's Success

Facebook: Zuckerberg's flight to stardom at 28

Published on Sat, May 19, 2012 at 13:21 |  Source : CNBC-TV18

Updated at Sat, May 19, 2012 at 13:58  

Facebook, the world's largest social network goes down in history for pulling off the world's largest IPO ever with 421 million shares on offer. Now while its valuation has caused shock enough, it would be shortsighted to measure the Facebook phenomenon nearly through the prism of the market reaction. Mark Zuckerberg seems to have truly understood the idea that no man is an island.

Facebook is a cross generational story that feeds on our inbuilt needs to connect, communicate and share. While there are questions on the sustainability of revenue streams, data of privacy management style etc. you can't help, but drop your hat to the vision, ingenuity and dogged persistence of a 28 year old who have created a company more valuable than the iconic Disney, Ford and even Boeing.

At 28 Mark Zuckerberg is amongst the world's richest people and he has already made the Time magazines list of most influential four times over. Zuckerberg's meteoric rise, the success has been well-documented and his story has even made billions at the box office. He has earned the respect of corporate leaders like the iconic Steve Jobs who said "I admire Mark Zuckerberg for not selling out, for wanting to make a company. I admire that a lot." But, while he has been heaped with a generous amount of praise, his critics have been scathing.

Divya Narendra, Founder & CEO of SumZero who had filed a court case against Facebook in 2008 says, "He has really shocked us. One day we wake up and read the school newspaper, there is a description of this website that sounds eerily like Harvard Connection, except it is called Facebook. About 8,000 Harvard students has signed on Facebook within the first 10 days of its launching. That was the entire college undergraduate and then a significant chunk of a graduate community. Our whole plan was to get Harvard on board and then to expand to other schools."

"But, because none of us were programmed, it took us three or four months to get connected and go up and running. By then, literally every school in the Ivy League had been on this. Mark had got funding to the tune of USD 0.5 million from Peter Theil, he had expanded it to many other colleges. When you are talking about a website where network effects are so important. First, it is really crucial. A big basis for why we really pursued them in court was that it was a key component of our strategy, the strategy of being the first at Harvard and then to expand through the Ivy Leagues," explained Narendra. 

And expand it did, far beyond America's Ivy League network. Today, with over 900 million users Zuckerberg is laughing all the way to the bank and is reaping the rewards for his patience and persistence. After all, not many 22 year olds would have had the courage or the audacity to decline a billion dollar offer! But, that's exactly what Zuckerberg did to Yahoo in 2006.

Ashish Kashyap, CEO, Ibibo Group is of the view, "The company had many opportunities to sell out and the nice thing about the company and it's founder was that they stuck to their guns and they held on. As a result, today we see it becoming such a valuable company. Last, but not the least, everything is about the customers. Facebook was not the first in the social networking party, there were many companies. One thing that they did right was that they lived very close to the customers to create a service which was far superior. It was a superior execution."

Super execution is what the Facebook team will have to deliver to justify the jaw dropping valuations. Already questions are being raised about the sustainability of advertising revenues, Facebook's lifeline. It didn't help the General Motors, one of the largest advertisers in the US. It pulled out its paid for advertising on Facebook just days before the IPO. GM claims that paid ads had little impact on consumers.

Hitesh Oberoi, Co-founder and CEO, Info Edge India said, "The stock is a little expensive, not because of any other reason but because Facebook is yet to figure out the monetization piece totally. They haven't got it bang on like Google as yet. There is a lot of work which still needs to be done on their side. While the users are very happy with Facebook, advertisers are still not very clear on how to use the media. The valuations look a little expensive but I am sure they will figure it out with time."

Facebook will also need to figure out how to sustain the whopping 88% revenue growth it had in 2011 in the face of competition.

Just like individuals, companies can setup pages to communicate with fans for free and Facebook can make money here as well. Take the 41 million plus fans who like Coca Cola. Coke can pay Facebook to make sure that fans see its messages and updates. Even more valuable to a brand is reaching friends of fans. In Coke’s case, that's hundreds of millions of people. Facebook leverages the information its users shares to deliver ads with social context, extending brands reach in a personalized way to hundreds of millions of new eyeballs.

In case of many games like Zynga's Farmville, users can play for free but, there is big money here too. Players can buy virtual goods with Facebook credits which cost real money. So from that respect, 30%.

On a limited edition Farmville haunted house that runs USD 7, Facebook's take - USD 2.10. With tonnes of virtual stuff sold everyday, it adds up fast. In 2011, virtual goods and ads from Zynga alone generated USD 445 million in revenue for Facebook.

But what does the Facebook IPO mean for Indian internet companies which have seen private equity interest but have so far stayed away from the markets.

Darius Pandole, Partner, New Silk Route Advisors points out, "As some of the leading Indian internet companies scale up and become profitable, we will see them coming into the IPO markets. The Indian markets typically prefer to value companies based on cash flow or based on asset value as opposed to the future potential of a business model. Hence, some of these will need to demonstrate that increase in revenue on profitability before they can come and do a successful IPO."

While India will have to wait for its Facebook moment, for Zuckerberg and team - the sun is shining. His net worth skyrockets to USD 20 billion, his team walks away with tiny sums as to the 33 underwriters for the IPO led by Morgan Stanley, JPMorgan and Goldman Sachs. Now, what Zuckerberg does with the cash will be the next big debate.

Zuckerberg could eventually make a run at that other social network - Twitter.

"They have got so much money already with just the cash that they are throwing off from operations; they don't actually need the money that they are going to raise in this IPO," believes Rocky Agrawal, Independent Analyst.

In Mark Zuckerberg's words: "There is a huge need and huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future."