Facebook recently agreed to buy photo-sharing start-up Instagram for about $1 billion and on Monday the company said it would pay $550 million for hundreds of patents from Microsoft Corp.

The deals came weeks before Facebook was expected to enter the final stages of what will likely be the largest Silicon Valley initial public offering ever. The company has been aiming for an IPO sometime in May, with a roadshow typically taking about two weeks before the stock market debut.

The delay adds another twist to the high-profile offering a day after the company released quarterly results showing sagging revenue and soaring operating expenses, prompting at least one analyst to lower their valuations of the company.

Prospective investors will now have to wait about a week longer to get a glimpse of Facebook's roadshow, because the company will have to discuss the impact of its recent acquisitions with the Securities and Exchange Commission, the source said.

The SEC's Corporate Finance division is currently reviewing Facebook's IPO filing and the regulator must declare the document effective before Facebook can begin selling shares.

The Instagram and patent acquisitions are likely not material, which means Facebook will probably not have to answer SEC questions through a new regulatory filing, which would have taken more time, the source added. The person did not want to be identified because they are not authorized to speak publicly about the IPO.

A spokesman for Facebook declined to comment. An SEC spokeswoman declined to comment.

Facebook management was aiming to launch a roadshow as early as May 7 and for the start of trading late in the week of May 14. But now Facebook is more likely to start the roadshow in the week of May 14, or even towards the end of that month, CNBC reported earlier on Tuesday.

That would likely delay Facebook's stock market debut until early or mid-June. That is because the Memorial Day holiday, which is May 28, will likely mean that the stock market is less liquid and less hospitable to a new issue like Facebook, CNBC said.

ASKING QUESTIONS

Financial results filed with regulators this week have raised questions among some about Wall Street's valuation for Facebook, a subject of intense speculation ahead of its IPO.

During Facebook's talks to acquire Instagram this month, the two companies discussed a potential value of $104 billion for the social network, the New York Times reported.

That figure would defy "any standard valuation metric" based on the most current financial results, said Max Wolff, chief economist and senior analyst at GreenCrest Capital.

"They're putting out are very strong numbers, but they're not quite living up to the discussion that have stratospheric valuations above $100 billion," Wolff said.

Facebook's net income slid 12 percent to $205 million in the first three months of the year, the regulatory filing showed. Total sales fell 6 percent to $1.06 billion while costs rose 16 percent to $677 million.

Advertising revenue fell roughly 8 percent last quarter to $872 million.

The company attributed the decline to a typical slowdown during the first three months of the year that has so far been "partially masked" by its explosive overall growth.

But analysts said the latest results suggested more broadly that the company was still figuring out its advertising business -- which makes up 82 percent of Facebook's income, filings showed -- as it continues to reorient itself toward catering to major brands.

"It calls into question the scalability of the business," said Brain Wieser, an analyst at Pivotal Research Group who lowered his valuation of Facebook on Tuesday to $75 billion from $82 billion. "Servicing large brands, which is Facebook's growing focus, is very labor intensive."

Facebook last year hired Carolyn Everson, a former ad sales executive at Microsoft and Viacom, to head its global marketing team. And in February, the company organized a splashy conference in New York, dubbed fMC, to woo marketers and introduce its brand pages.

(Editing by Gunna Dickson and Muralikumar Anantharaman)

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