Investors swarm Facebook's pre-IPO road show kickoff

@CNNMoneyInvest May 7, 2012: 5:32 PM ET

NEW YORK (CNNMoney) -- Ahead of what's expected to be the biggest technology IPO in history, Facebook's executive team entered its first round of investor meetings to crowds befitting the arrival of a boy band.

Facebook's power trio -- CEO Mark Zuckerberg, chief operating officer Sheryl Sandberg, and chief financial officer David Ebersman -- used a side entrance to duck into a Sheraton hotel in Manhattan early Monday afternoon. The group then spent 25 minutes answering about a dozen questions from some 400 investors packed into a ballroom, according to three attendees who described the presentation to CNNMoney.

Andrew Beja, a manager with Granahan Investment Management who attended the presentation, spoke on the record. Two other attendees declined to be identified by name.

Even the most pessimistic potential investors said they expect Facebook to price its IPO above the range of $28 to $35 per share it outlined in a recent Securities and Exchange Commission filing.

Still, investors raised several key concerns during Monday's question-and-answer session.

Chief among them: How will Facebook make money on mobile devices? Zuckerberg admitted that the social network is having trouble charting its growth in mobile and tracking its user base.

During the Q&A, Zuckerberg fielded a question about whether Facebook might continue to spend large sums of money to buy fast-growing Web services, similar to the company's recent $1 billion purchase of photosharing application Instagram. Zuckerberg called Instagram a unique acquisition and told the audience not to expect more deals of its size.

Both Zuckerberg and Sandberg discussed Facebook's commitment to improving its business through iteration -- what Zuckerberg calls "the hacker way" of doing business.

Zuckerberg highlighted the company's attempts to build a daily deals site and cited it as an example. Even though Facebook failed in its first attempt and shut down its deals product, Zuckerberg said the company is gaining traction with a new type of daily deals offering, according to a second investor present.

Still, neither Zuckerberg nor his deputies could explain the slowdown in Facebook's revenue in the first quarter of 2012 with anything better than "seasonality."

As one potential investor put it: "I've never seen a company that's blamed seasonality for its slowdown turn around and accelerate."

The executives' comments largely followed the talking points they laid out in the digital version of Facebook's road show, which Facebook posted online last week for public viewing. A company representative declined to discuss Facebook's private road show presentations, citing regulatory rules that discourage companies from speaking publicly about their IPO prospects.

Granahan Investment Management's Beja praised Zuckerberg's performance.

Others grumbled about the long wait to get into the ballroom for the lunch event. Investors said they were made to feel like cattle during the security checks to get inside.

Facebook's team of underwriters, including Morgan Stanley's (MS, Fortune 500) Michael Grimes and JPMorgan's (JPM, Fortune 500) Jimmy Lee, arrived around 11:45 a.m. through the front entrance, while Zuckerberg, Sandberg and Ebersman managed to elude many of those waiting for their arrival by using a side entrance.

Facebook is expected to price its IPO the evening of Thursday, May 17 and begin trading the next day on the Nasdaq exchange under the ticker FB.

Facebook's executives and its underwriters will next head to Boston for a 7:15 a.m. breakfast Tuesday at the Four Seasons. The road show will move around the United States over the next two weeks, wrapping up in Menlo Park, California on May 16, according to research firm IPO Boutique.  To top of page

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