Investors Pummel Facebook

By JACOB BUNGE, AARON LUCCHETTI and GINA CHON
Stock Falls 11% in First Full Day of Trading; Complaints of Too Many Shares.

Criticism of the Facebook Inc. stock deal grew as the shares dropped below their offering price in their first full day of trading Monday, wiping $11.5 billion off the social network's market value.

The company, its investment bankers and the Nasdaq Stock Market came under fire for failing to ensure a smooth debut for one of the most anticipated deals in recent memory. Facebook shares, which began trading Friday at $38 and managed to add just 23 cents by the end of that day, fell 11% Monday to $34.03.

The selloff came partly because some investors who were allotted more Facebook shares than they expected moved to pare their holdings, said people familiar with the matter. Retail, or individual, investors usually are allocated up to 20% of the total shares allotted in an IPO, but in Facebook's case, retail allocation was around 25%, the people said.

Days before the initial public offering, Facebook, whose executives played an active role in the IPO process, according to people familiar with the matter, increased both the price and the number of shares being offered. As a result, many retail investors weren't hungry for more shares once trading began, according to the people.

A representative for Facebook declined to comment. The company raised $16 billion in the offering.

George Brady, a 66-year-old recruiter in North Carolina, bought 1,000 shares of Facebook a few minutes after it opened for trading Friday. He said by Monday morning, he sold his holding, taking a $2,770 loss.

Mr. Brady said he tried not to purchase the shares in the first place, but was unable to withdraw his order on his Charles Schwab account, calling the situation "ridiculous." Technical problems on the Nasdaq Stock Market prevented some investors from confirming their trades or trade cancellations.

"I was stuck for six hours trying to figure out whether I owned this dog or not," said Mr. Brady. He said he has been in touch with Schwab. Schwab didn't return a call requesting comment.

Facebook's offering, one of the biggest U.S. IPOs, was supposed to burnish the reputations of Morgan Stanley, the deal's lead banker, as an underwriter, and Nasdaq OMX Group Inc. as the listing exchange of choice for hot technology companies.

"This has been a train wreck," said one hedge fund manager, whose fund also decided to sell some of its shares Monday. He said his fund was allotted 500,000 more Facebook shares than he expected.

The hedge-fund manager acknowledged that his fund and others asked for more than they wanted, thinking that they would only get half or less than they ordered, as usually happens in an IPO that is expected to have high demand. With some investors, including retail shareholders, getting a larger than expected allotment, demand was already dampening.

As a result, he had a bad feeling about Facebook going into the beginning of trading. On Monday, he said he was "spooked." Even though it wasn't a moneymaker, his fund decided to sell some shares because of worries about the flood of shares that could hit the market later after employee lockup periods end.

Some investors faulted Morgan Stanley and Facebook for overloading the market with too many shares. Just before the offering, Facebook expanded the number of shares by 25%, to 421.2 million.

"The underwriters completely screwed this up," said Michael Pachter, an analyst at Wedbush Securities. The offering "should have been half as big as it was, and it would have closed at $45."

A person familiar with the matter said Morgan Stanley did what it was "paid to do," adding the bank "stood by the client and supported the issue."

At $34 a share, Facebook has a price-to-earnings ratio, a measure of how expensive or cheap a stock is, of about 85 times projected earnings for the next 12 months, according to CapitalIQ. By comparison, Google Inc. trades at 13 times earnings.

"Facebook's IPO priced at a level well-above where we foresaw compelling 12-month returns," BTIG analyst Richard Greenfield said in a research note Monday. With revenue and earnings growth decelerating in 2012, "we find Facebook's current valuation unappealing."

The stock closed a hair above the $38 IPO price during Friday's trading debut, after Morgan Stanley stepped in to prop it up, according to people familiar with the matter. As the deal's so-called stabilizing agent, Morgan Stanley could support the stock through a pool of Facebook shares known as an overallotment. But on Monday, the shares lost their footing, at one point touching $33.

"What you saw today was a marketplace that felt pretty certain the bankers were long more stock than they wanted," Michael Shea, managing partner at Direct Access Partners, a financial-services firm, said Monday.

"You could see the halfhearted attempt to hold the stock at 38 this morning during premarket trading," Mr. Shea said. "When the decision was made and the buyer stepped away, it took less than five minutes for that stock to trade down a dollar."

Mr. Shea, whose firm has only institutional clients, declined to comment about whether his clients bought or sold Facebook stock on Monday.

Steve Bishop, the portfolio manager for the RS Technology Fund, with $235.3 million in assets, said his fund bought shares of Facebook through the allocation process last week, but then quickly sold them "somewhere in the 40s" shortly after the company when public on Friday.

Mr. Bishop said he felt the IPO "was getting a little frothy," which is why he decided to sell directly after the IPO. He also described the IPO as "overhyped."

While some investors received more shares than they expected, one person familiar with the deal said many institutions were allocated "dramatically less" than the amounts they had requested. The person noted that the shares opened about $4 above the offering price on Friday and said Nasdaq's technology snafus left even Morgan Stanley's bankers and traders in the dark on the status of their positions.

Problems with Nasdaq's IPO mechanism Friday had led to an approximate 20-minute period in which the exchange stopped confirming new orders for the shares, as well as cancellations or changes to standing orders.

Traders said there weren't any problems trading the shares by later Monday.

Nasdaq officials told clients they would have to seek "accommodation" through the exchange's rules for handling disputed transactions. In such situations, brokers can petition the exchange to get compensation for losses proven to be the result of Nasdaq systems failures.

Nasdaq hopes to earmark at least $13 million to resolve bad trades, a company spokesman said. But this figure may undershoot the financial damage sustained by brokers who made up losses for retail and institutional investors that had trades affected by the glitches.

The Financial Industry Regulatory Authority, or Finra, a Wall Street regulator, will oversee arbitrating and distributing the money to firms, Nasdaq told traders Monday. Finra will review trading data and issue a report to the exchange detailing the "total value of all valid claims," according to the notice. A spokeswoman for Finra declined to comment.

Exchange staff told brokers Monday that the process of parsing Friday's trades and determining which losses would be compensated could take one to three weeks, according to people involved in the discussions. Nasdaq is planning to hold a conference call Tuesday to further detail the process, brokers said.

Israel’s gay rights record touted in NY

By BENJAMIN WEINTHAL, JERUSALEM POST CORRESPONDENT

Birthright Israel alumni placed a mural in Manhattan’s West Village which contrasts gay rights in Israel with discrimination elsewhere.

BERLIN – The alumni association of Birthright Israel placed a mural in Manhattan’s West Village neighborhood last week, which juxtaposed the rights of gays in Israel with criminal penalties for gays in such countries as Syria and Iran.

The mural, which appears on a wall in a parking lot in Greenwich Village, has unleashed a mixed set of views on contrasting Israel’s record on gay rights with those of Muslim-majority countries that are violently hostile toward same-sex relations.

The mural was launched on Friday and shows the outlines of two men holding hands. It poses the question above the men: “Who would YOU want at your wedding?” The couple hold two balance scales. The pro-Israel scale contains a text saying “Same sex couples can legally adopt children, gay people serve openly in the military and government” and more than 10,000 attended the 2011 Tel Aviv Gay Pride Parade.

The scale for “Israel’s neighbors,” notes that Iran punishes homosexuality with death and same-sex relations are illegal in Syria. The text continues that “There is no pride parade in Egypt, Jordan or Gaza.”

In an email to The Jerusalem Post on Sunday, Stuart Appelbaum, a leading gay rights activist in New York and head of the Jewish Labor Committee, wrote, “The mural is a visible reminder of the realities of life for members of the LGBT communities in the Middle East. Israel is unquestionably the most accepting society for LGBT people – both Arabs and Israelis – in the region. Israel-bashers who refuse to acknowledge this reality, resent the mural. The mural demonstrates that the truth can often get in the way of their opinions.”

Yoav Sivan, an Israeli journalist living in New York who writes for the biweekly publication Gay City News, told the Post on Sunday, “Those behind the mural may have meant well, but they ended up belittling and patronizing Israel and Israeli activists.

Ambassador [to the US Michael] Oren got it right when he said that the comparison with Israel’s neighbors is a very low bar. Next time choose a more challenging bar for us to aspire. That would show your respect to Israel.”

According to the New York Times City Room blog last week, Keren Gelfand, senior press officer for the Israeli Consulate, confirmed to the Times “that all of the statements in the mural regarding gay rights in Israel were accurate.

Israel does not allow same-sex marriage, but it recognizes same-sex marriages performed abroad.”

Jayson Littman, the founder of He’bro, an organization that promotes events for secular and cultural gay Jews in New York City, wrote the Post on Sunday,” I applaud Birthright for bringing awareness to Israel’s gay rights movement, but we must remember: Gay rights in Israel were fought and won in the Supreme Court by LGBT activists over the years. Rights were not given on a silver platter. Also, we must be more aware to compare Israel’s progressiveness on gay rights to Western countries as Europe and the USA and not extreme regimes such as Iran or Syria. That is where the scale should be measured against.”

The City Room Blog entry titled “A West Village Mural Weighs Gay Rights in the Middle East” quoted the Birthright Israel alumni community director, Rebecca Sugar, saying “Israel is often attacked and maligned for things that aren’t true. There is only one country in the Middle East where you can live freely, as you are. The surrounding countries who accuse Israel of prejudice and bias are prejudiced and biased.”

The Times cited Adem Carroll, a member of the Muslim American Civil Liberties Coalition for Truth and Justice, who slammed the mural as “blatantly divisive, opposing Israel against its neighbors in the region.”

Meanwhile, Iran has stepped up its public executions of gay men over the past two months. According to media reports, one gay man was hanged in April and four men charged with sodomy are slated to be hanged. Last week, the British-based NGO Small Media released a report, “LGBT Republic of Iran: An Online Reality” The study reveals how the “repressive Iranian regime" uses the Internet to entrap LGBT Iranians.

Top Commander Reiterates Iran's Commitment to Full Annihilation of Israel

TEHRAN (FNA)- Chief of Staff of the Iranian Armed Forces Major General Hassan Firouzabadi said threats and pressures cannot deter Iran from its revolutionary causes and ideals, and stressed that the Iranian nation will remain committed to the full annihilation of the Zionist regime of Israel to the end.

Addressing a defense gathering here in Tehran on Sunday, General Firouzabadi said that nations should realize the threats and dangers posed by the Zionist regime of Israel.

He reiterated the Iranian nation and Supreme Leader's emphasis on the necessity of support for the oppressed Palestinian nation and its causes, and noted, "The Iranian nation is standing for its cause that is the full annihilation of Israel."

The top military official reminded that the Iranian Supreme Leader considers defending Palestine as a full religious duty and believes that any kind of governance and rule by anyone other than the Palestinians as an instance of usurpation.

Earlier this year, Supreme Leader of Islamic Revolution Ayatollah Seyed Ali Khamenei stressed in explicit remarks Iran's direct involvement in the Palestinian and Lebanese confrontation with Israel, including the Lebanese Summer 2006 33-day resistance against the Zionist regime.

"Wherever Iran interferes, it announces it in a very straightforward manner. For instance, we interfered in confrontations against Israel, which resulted in the (Lebanese) victory in the 33-day war and (Palestinians' victory in) the 22-day (Gaza) war," Ayatollah Khamenei said, addressing millions of Friday Prayers worshippers on Tehran University Campus in February.

"In future too, we will support and help everyone who opposes the Zionist regime," the Leader underscored.

"The Zionist regime is a real cancerous tumor that should be cut and will be cut, God Willing," Ayatollah Khamenei underscored.

Huge asteroid to fly close to earth, may destroy satellites

London: A 150-foot-wide, 140,000 tonne asteroid may come so close to Earth early next year that it might destroy communications satellites.

The asteroid, DA14, discovered by astronomers at LaSagra Observatory in Spain, could come so near to Earth on February 15, 2013, that it would disrupt geosynchronous satellites.

While NASA has said the chance of the asteroid hitting Earth is 0.031 per cent, if it did, it would hit with the force of a 2.4 megaton explosion, similar to the mysterious Tunguska event of 1908 which levelled hundreds of square miles of Siberian forest, Daily Mail reported.

The asteroid's exact orbital path is being determined by NASA and astronomers are erring on the side of caution in case it does come in contact with a satellite.

"That's very unlikely, but we can't rule it out," said Paul Chodas, a planetary astronomer at NASA's Jet Propulsion Laboratory (JPL) in Pasadena California.

While the asteroid is currently a 'fuzzy little blob', as seen through telescopes, 2012 DA14 may eventually come to pass 21,000 miles away from Earth putting synchronous satellites in the firing line, the paper said.

"The orbit for 2012 DA14 is currently very Earth-like, which means it will be very close to Earth on a regular basis," said Mr Chodas.

In the preceding months to February, NASA will try to form a fuller picture of where and how close the satellite will get, the paper reported.

"We don't know exactly where it is, and that uncertainty maps through to an uncertainty in the orbit and predictions," said Steven Chesley, who also works at JPL.

But for now, no one at NASA is worried that the asteroid will hit but say that 2012 DA14 might be visible from Earth as it flies past.

"It might be visible to people with good binoculars or a small telescope," said Mr Chodas, adding that, "For such a small object, that's really unusual."

While astronomers examine their initial estimate of a 0.031 per cent chance of 2012 DA14 hitting earth, they cannot rule out the possibility of it hitting in 2020 on its next fly-pass.

That is because they will have to see how close 2012 DA14 gets to Earth in February and how much our gravitational pull affects its course for its next fly by in 2020.

If it does hit, scientist believe that its south-bound approach mean that it will hit Antarctica or the Southern Ocean.

The detonation of the 140,000 tonne rock would not end civilisation, but would potentially cause massive loss of life if it hit a populated centre.

Fukushima Reactor 4 poses massive global risk

By Andy Johnson, CTVNews.ca

More than a year after a devastating earthquake and tsunami triggered a massive nuclear disaster, experts are warning that Japan isn't out of the woods yet and the worst nuclear storm the world has ever seen could be just one earthquake away from reality.

The troubled Reactor 4 at the Fukushima Daiichi nuclear plant is at the centre of this potential catastrophe.

Reactor 4 -- and to a lesser extent Reactor 3 -- still hold large quantities of cooling waters surrounding spent nuclear fuel, all bound by a fragile concrete pool located 30 metres above the ground, and exposed to the elements.

A magnitude 7 or 7.5 earthquake would likely fracture that pool, and disaster would ensue, says Arnie Gundersen, a nuclear engineer with Fairewinds Energy Education who has visited the site.

The 1,535 spent fuel rods would become exposed to the air and would likely catch fire, with the most-recently added fuel rods igniting first.

The incredible heat generated from that blaze, Gundersen said, could then ignite the older fuel in the cooling pool, causing a massive oxygen-eating radiological fire that could not be extinguished with water.

"So the fear is the newest fuel could begin to burn and then we'd have a conflagration of the whole pool because it would become hotter and hotter. The health consequences of that are beyond where science has ever gone before," Gundersen told CTVNews.ca in an interview from his home in Vermont.

Worst-case scenario

There are a couple of possible outcomes, Gundersen said.

Highly radioactive cesium and strontium isotopes would likely go airborne and "volatilize" -- turning into a vapour that could move with the wind, potentially travelling thousands of kilometres from the source.

The size of those particles would determine whether they remained in Japan, or made their way to the rest of Asia and other continents.

"And here's where there's no science because no one's ever dared to attempt the experiment," Gundersen said. "If it flies far enough it goes around the world, if the particles stay a little bigger, they settle in Japan. Either is awful."

Essentially, he said, Japan is sitting on a ticking time bomb.

The damaged Reactor 4 cooling pool was reinforced by workers who went in and "jury-rigged" it after the tsunami, but the structure still contains a massive amount of fuel, Gundersen said.

Reactor 3 has less fuel inside its cooling pool, but it has not been strengthened since the disaster and poses a greater risk of failing.

"Reactor 3 has a little less consequences but a little more risk, and Reactor 4 has more consequences but…a little less risk," he said.

Finding a fix

The solution, Gundersen said, is for the Tokyo Electric Power Company (TEPCO) to immediately begin the process of transferring the fuel rods from the cooling pools to dry cask storage -- a massive and costly endeavour, but one he said is absolutely essential.

To even begin the removal process at Reactor 4, TEPCO would first have to construct a crane capable of lifting the 100-tonne fuel rod canister, since the original crane was destroyed in the disaster last year.

In order to do that, they would have to build a massive structure around the existing pool to support the new crane, which would then be used to lift the fuel rod canister from the water, down to the ground and into a steel and concrete dry-cask.

All this of course, has to be done in a highly contaminated area where workers must wear protective suits and limit their radiation exposure each day, adding time and expense to the process.

Still, with the consequences so high, Gundersen said there's no time to lose.

"This is a 'now' problem, this is not a 'let's-wait-until-we-get-the-cash-flow-from-the-Japanese-government' problem. The consequences of a 7 or 7.5 earthquake don't happen every day, but we know it happened last year so you have to anticipate that it will happen," Gundersen said.

‘Fate of the world' depends on Reactor 4

He's not alone in pressing the Japanese government to adopt a sense of urgency about the Reactor 4 dilemma.

Robert Alvarez, a former top adviser at the U.S. Department of Energy, also expressed concern in a letter to Akio Matsumura, a Japanese diplomat who has turned his focus to the nuclear calamity.

Matsumura had asked Alvarez about the risk associated with Reactor 4.

"The No. 4 pool is about 100 feet above ground, is structurally damaged and is exposed to the open elements," Alvarez said in his response. "If an earthquake or other event were to cause this pool to drain this could result in a catastrophic radiological fire involving nearly 10 times the amount of Cesium-137 released by the Chernobyl accident."

Mitsuhei Murata, Japan's former ambassador to Switzerland and Senegal, has also made it his mission to convince the UN and the world that urgent action is needed.

"It is no exaggeration to say that the fate of Japan and the whole world depends on No. 4 reactor," Murata said in a recent letter to UN Secretary-General Ban Ki-moon, in which he urged him to back efforts to address the problem.

Last week, Japanese Prime Minister Yoshihiko Noda said most major threats have been eliminated and "cold shutdown" status had been achieved in December.

But Noda declined to comment directly on the risk posed by Reactor 4, only telling The Wall Street Journal's Asia edition that it was important to "remain vigilant."

"We have passed a situation where people have to run far away or evacuate," he said. "Ahead of us are time-consuming tasks like decontamination and decommissioning (of the plants). We will proceed with the utmost care."

Gundersen said the remaining challenges at the Fukushima Da-Ichi site are not technological. Everyone knows what needs to be done and how to do it, he said. The challenge lies, rather, in convincing Japan that action must be taken now.

That will require international pressure, as well as international investment, on a grand scale, he said.

"We're all in a situation of having to pray there's not an earthquake. And there's the other half of that, which is pray to God but row toward shore. And Tokyo's not really rowing toward shore right now," Gundersen said.