WASHINGTON (Reuters) – The Securities and Exchange Commission will review the Nasdaq trading glitches surrounding the initial public offering of Facebook Inc on Friday, an agency spokesman said.

“As is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it,” SEC spokesman John Nester said in a statement.

(Reporting By Dave Clarke; Editing by Gary Hill)

DETROIT/NEW YORK (Reuters) – Facebook may only have itself to blame for why General Motors rained on its IPO parade this week.

GM announced the decision to drop Facebook paid ads on Tuesday in what was the first highly visible crack in Facebook’s strategy and illustrated doubts about its perceived advantage over traditional media.

GM’s decision followed Facebook officials’ failure to convince top marketing executives at the U.S. automaker of the benefits of Facebook’s paid ads at a meeting that took place in the past few weeks, people familiar with the meeting said on Thursday.

That was after Facebook officials focused more on touting the social networking website’s free pages, the sources said.

“It kind of backfires on them in a funny way,” said one of the sources, who asked not to be identified, of the emphasis on the free pages.

News of the meeting, which sources said took place at Facebook’s Menlo Park, California, headquarters, comes on the eve of its much-anticipated market debut. The company on Thursday priced its initial public offering at the top of its target range and is set to raise up to $18.4 billion.

Facebook and GM declined to comment about the meeting or their relationship.

GM dropped its Facebook ads because they were less effective than other options such as Google’s AdSense, the sources said. Facebook’s ads garner about half the clicks per page view, a measure of effectiveness, compared with the average website.

Moreover, Facebook’s ad prices were expected to rise after the company’s IPO. Ad prices are set in auction and vary depending on the target audience.

Some investors fear Facebook has not yet determined how to make money from the growing number of users who access the website from their smart phones. Further, revenue growth from its ad business has slowed in recent months.

However, Facebook boosted the price and the size of the offering earlier this week, underscoring investor enthusiasm for the company’s shares despite ongoing questions about its long-term money-making capabilities.

During the meeting with GM, Facebook officials emphasized the lure of free posted content on their website, the sources said. By contrast, the ads looked “kind of meager and perhaps expensive by comparison,” one source said.

‘SEE IF IT WORKS’

GM, the third-largest U.S. advertiser, will still maintain Facebook pages, which cost nothing to create and for which it pays no fees, to market its vehicles.

Sources said GM’s decision was not permanent and the Detroit automaker could buy Facebook ads in the future.

“They’re just going to try not doing it for a while and see how it goes; just make content and if it works, it works,” one source said.

Facebook founder Mark Zuckerberg has said in the run-up to the IPO that the company was built to accomplish a “social mission,” but has also ranked creating a “transformative” advertising experience as a top priority.

But so far, Facebook’s “click-through rate”, also known as “clicks per page view,” is half the average for ads on the Internet, according to Larry Kim, founder and chief technology officer of Internet ad consultant Wordstream.

The average targeted ad on the Internet is “clicked” on by a consumer once every 1,000 times it is viewed, Kim said. Facebook’s rate is half that, while Google’s is 4 in 1,000.

“Facebook is good in that an advertiser can target based on age and gender by measuring certain ‘likes,’ but is not connecting with the right audience at the right time,” he said, calling the website’s banner ads staid and uninspiring.

Google’s banner ads are more targeted, even following a consumer from website to website, Kim said.

GM, which ranks behind Procter & Gamble Co and AT&T Inc in U.S. advertising spending, spent $1.1 billion on U.S. ads last year, according to ad-tracking firm Kantar Media. It spent about $271 million on online display and search ads excluding Facebook advertising.

(Additional reporting By Alexei Oreskovic in San Francisco and Deepa Seetharaman in Detroit; Editing by Muralikumar Anantharaman)

(Reuters) – Home Depot Inc posted quarterly sales that fell short of Wall Street’s heightened expectations on Tuesday after demand slowed in April following a jump in home improvement projects spurred by an unusually warm winter.

But results were stronger than the company expected, as the warm weather pushed forward a significant amount of sales that would have normally occurred in the second quarter.

And despite recent encouraging signs about the U.S. housing market, the company said it has not fully recovered from the housing crash.

“Adjusting for weather impacts and the pull-forward of activity, the quarter’s results were encouraging and consistent with our view that growth this year will be reflective of broad GDP growth, rather than a recovery in the housing market,” said Home Depot Chief Executive Frank Blake on a conference call.

Spring is traditionally the biggest selling season of the year for home improvement chains. But this year, customers began projects early, the company said. That fueled investor optimism which lifted sales expectations past the company’s own outlook.

Home Depot’s sales rose 5.9 percent to $17.81 billion in the first quarter ended on April 29, missing analysts’ average estimate of $17.96 billion, according to Thomson Reuters I/B/E/S. Same-store sales, or sales open at least a year, rose 5.8 percent globally, and 6.1 percent in the United States.

After the unusually warm weather in February and March, Wall Street analysts were looking for a global same-store sales rise of 6.5 percent in the quarter, Oppenheimer analyst Brian Nagel said.

“A 5.8 percent increase in (same-store) sales is a very good number, but expectations are the name of the game, and they had gotten a little high,” said Edward Jones analyst Robin Diedrich.

Home Depot shares, which had gained more than 18 percent this year through Monday, were down 1.7 percent in midday trade.

SPRING PROJECTS

Home Depot estimated that weather lifted U.S. same-store sales by 3 percentage points, with as much as a third of that being sales that would have otherwise occurred during the second quarter. The company said second-quarter same-store sales growth should be lower than the first quarter.

The average transaction price at Home Depot rose 2.2 percent to $54.51 in the quarter.

Same-store sales rose 6.2 percent in February, 6 percent in March and 5.4 percent in April. The U.S. market saw a similar slowdown in April, rising only 5.6 percent, after gains of 7.2 percent in February and 5.8 percent in March.

The lower-than-expected sales at Home Depot caused JPMorgan analyst Christopher Horvers to lower his sales estimates for smaller rival Lowe’s, to 4 percent growth from a prior estimate of 5 percent growth. Lowe’s plans to report quarterly results next week.

Home Depot saw strength in seasonal products like lawn mowers, grills and planters, while plumbing and kitchen supplies were weaker.

The company’s net earnings rose to $1.04 billion, or 68 cents a share, from $812 million, or 50 cents a share, a year earlier.

Excluding items, Home Depot earned 65 cents a share, meeting analysts’ estimates, according to Thomson Reuters I/B/E/S.

Home Depot was quicker to cut costs than rival Lowe’s, and has benefited as housing demand picks up in regions where it has a heavy presence. It has also gained from opening more centralized distribution facilities.

The company expects sales to pick up later in the year. It sees fiscal-year sales rising about 4.6 percent, up from its prior outlook calling for a 4 percent increase. It raised its profit outlook for the year to $2.90 a share from a prior forecast of $2.79 a share.

The outlook implies a 1 percent to 2 percent rise in same-store sales for the rest of the year, which is probably conservative, UBS analyst Michael Lasser said.

Shares of Home Depot were down 86 cents, or 1.7 percent, at $49.02 on the New York Stock Exchange.

(Reporting by Dhanya Skariachan in New York; Editing by Lisa Von Ahn, Bernard Orr)

SAN FRANCISCO (Reuters) – Yahoo Inc could be weeks away from selling 15 to 25 percent of Alibaba Group‘s stock back to China’s largest e-commerce company, in a deal designed to eliminate complexities that had scuttled the parties’ previous negotiations, a person familiar with the matter said.

The two companies have been in talks for a month, the person said, but cautioned that there is no guarantee a deal will be reached.

Numerous discussions have been held in recent years about a deal for Alibaba to reclaim some or all of the 40 percent stake in the company that Yahoo acquired in 2005.

A $17 billion tax-free asset swap between the two companies fell apart in February.

The latest deal would not be tax-free and would be much more straightforward, the person told Reuters on Friday.

“The overall complexity of this deal is much simpler. There’s no IRS risk, there’s no complications with regards to the identification of assets,” the person said. In a best case scenario, a deal could be weeks away, the person said.

The situation may have become more complicated following Thursday’s revelation that Yahoo Chief Executive Scott Thompson‘s resume falsely stated that he had earned a computer science degree in college.

Yahoo, which initially called it an “inadvertent error,” has since said its board is reviewing the matter. Activist investor Third Point, which is leading a proxy fight against Yahoo’s board of director and which discovered the error in Thompson’s resume, has demanded that Yahoo fire Thompson by Monday.

Yahoo and Alibaba declined to comment.

Yahoo acknowledged that it was in talks with Alibaba, during its first-quarter earnings conference call with analysts last month. During the call, Thompson said the two companies were working on a “simplified” transaction to “monetize” a portion of Yahoo’s stake in Alibaba.

To fund the deal, Alibaba would raise capital. The valuation that Alibaba receives in the fund-raising will determine how much Yahoo earns in the transaction, the source said.

In September, Alibaba was valued at $32 billion when Silver Lake and other firms invested in the company, according to media reports at the time. At that valuation, Yahoo could make $4.8 billion to $8 billion by selling 15 to 25 percent of Alibaba.

“Of all the previous ones we’ve worked on, this one feels like it might actually have a chance of getting done. Or at least it did until a day and a half ago,” the person said, referring to the controversy around Thompson’s resume.

Details of the talks were first reported by the Wall Street Journal on Friday.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

NEW YORK (Reuters) – Global stocks swooned and crude oil tumbled on Friday after a weak U.S. jobs report and data that suggested a deeper recession across the euro zone than previously thought dented sentiment.

Major U.S. and European stock indexes fell more than 1 percent, U.S. crude oil slumped about 4 percent and government debt prices jumped after the Labor Department said American employers reduced hiring more than expected in April.

The week was the worst this year for Wall Street stocks, with energy leading the decline. The S&P energy index of 44 gas and oil-related companies fell 2.2 percent on fears a worsening economy would sap demand.

“We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption,” said Gene McGillian of Tradition Energy.

Just 115,000 workers were added to payrolls last month, or 55,000 less than economists expected. While the unemployment rate fell one-tenth of a point to 8.1 percent, a three-year low, that was only because the workforce shrank as people retired or stopped seeking work.

The third straight monthly decline in hiring growth spurred concerns that the U.S. economy is losing momentum and doused hopes that a stretch of strong winter hiring had signaled a turning point for the U.S. recovery.

The Dow Jones industrial average closed down 168.32 points, or 1.27 percent, at 13,038.27. The Standard & Poor’s 500 Index fell 22.47 points, or 1.61 percent, at 1,369.10. The Nasdaq Composite Index slid 67.96 points, or 2.25 percent, at 2,956.34.

The U.S. jobs data added to the gloomy tone from Europe, where purchasing managers’ indexes, primarily covering services, suggested a recession across the euro zone could extend to mid-year and be deeper than previously imagined.

Markit’s Eurozone Services PMI, which gauges business activity over a month, came in at 46.9 for April, sharply lower than 49.2 in March. Anything below 50 signifies contraction.

The JPMorgan Global Purchasing All-Industry Output Index of about 20 countries showed declines in April from March.

In Europe, the pan-European FTSEurofirst 300 index closed down 1.7 percent at 1,027.15, and the Euro STOXX 50 index fell 1.7 percent to 2,248.34 despite strong earnings from Royal Bank of Scotland , BNP Paribas and Lafarge .

MSCI’s all-country world equity index fell 1.5 percent to 321.72.

Benchmark Brent crude in London fell to three-month lows around $113 a barrel, its steepest weekly fall since December, after the weak jobs report. Brent’s slide took three-day losses to more than 5 percent.

While the downbeat data weighed, traders said a combination of less-definitive factors – from confusion over margin changes to the breach of the 200-day moving average – compounded selling.

Brent futures settled down $2.90 at $113.18 a barrel, lows last seen in early February.

U.S. crude settled down $4.05 at $98.49 a barrel.

Some analysts said the jobs report, which followed weaker-than-expected services sector data this week, will fuel hopes for a third round of stimulus, or quantitative easing, by the Federal Reserve to keep rates low and to foster growth.

“The data in the U.S. is weakening somewhat. It puts into play that if the economy in the U.S. continues to weaken then QE3 will be on the table, so there are really no sellers of Treasuries,” said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.

The benchmark 10-year U.S. Treasury note rose 16/32 in price to yield 1.88 percent, and the 30-year U.S. Treasury bond gained almost a full point in price to yield 3.07 percent.

Gold rose as the weak data boosted bullion’s investment appeal on talk that a weaker economy might prompt further monetary easing by the Fed.

U.S. gold futures for June delivery settled up $10.40 an ounce at $1,645.20.

The dollar slipped against the yen in volatile trading after the payrolls number, with the U.S. currency down 0.45 percent at 79.83 yen.

The U.S. dollar index rose 0.33 percent at 79.481.

The euro was down 0.47 percent at $1.3088.

(Additional reporting by Richard Leong, Ryan Vlastelica, Julie Haviv, Matthew Robinson and Jonathan Leff, Reporting by Herbert Lash, Editing by James Dalgleish and Dan Grebler)

BEVERLY HILLS (Reuters) – The success with which “The Hunger Games” film harnessed social networks, en route to becoming 2012′s biggest blockbuster, underscores a growing threat to billions of dollars in movie-advertising revenue on which broadcasters rely.

The futuristic movie about children fighting to the death has scared up more than $375 million at the U.S. box office since it opened in March, in part because Lions Gate aggressively stoked interest on social network sites like Facebook and Twitter.

That meant Lions Gate marketers likely spent $15 million to $20 million less than a larger Hollywood studio might have, using a campaign heavier on television advertising, Lions Gate Entertainment Corp Chief Executive Jon Feltheimer said during the Milken Institute Global Conference in Los Angeles this week.

Movie studios will likely buy fewer TV ads in the future, and look more to online promotion, he said in answer to a question.

“The mix will change,” said Feltheimer. “Companies that are conglomerates, with large broadcast networks or a bouquet of cable channels are going to have to adapt. And it will be disruptive.”

Lions Gate devotes 10-15 percent of its budget to online promotion, he said. To stoke interest among its target audience of under-30 moviegoers, the studio’s efforts included a channel on Google Inc’s YouTube, a blog on Tumblr dedicated to the movie’s futuristic fashion, and a contest in which fans collected pieces to the film’s poster on several sites.

In all, the studio spent $45 million to market the film’s opening, according to people with knowledge of the expenditures.

TV networks “face a huge, huge risk” down the road, agreed Mel Karmazin, CEO of satellite radio service Sirius XM Radio Inc and a long-time advertising executive.

“It won’t happen in 2012 or 2013 but in the longer term it will hurt them,” he said. “People listen to what their friends say they like. Word of mouth is what advertising is about.”

BIG MONEY

Movie studios spent $2.9 billion last year to advertise their movies on TV, according to Kantar Media, which advises agencies and brand owners on media strategies. That was up 15 percent from 2007.

“The demographic that social networking really plays to is the ‘twilight’ late teens to early 20s,” said Kenneth Wisnefski, founder and CEO of internet marketing company WebiMax.

“When they see something they like, they go online to tell their friends about it.”

In contrast, he said bad word-of-mouth reviews among social network users doomed the 2009 Sacha Baron Cohen film “Bruno,” which opened strongly with $30.6 million on its first weekend but stalled and ended with $59.9 million.

“A lot of those viewers went online to tell their friends it was terrible,” said Wisnefski.

Chase Carey, deputy chairman and chief operating officer of News Corp, which owns cable channels and the Fox network, downplayed the threat of social networking sites.

“TV will have a truly important place in generating interest in new movies,” he said at the conference. Users of social networks “don’t like pop-ups and other ads.”

Feltheimer said Lions Gate’s online marketing was especially successful in Australia, where the movie will likely generate $35 million in ticket sales, among its larger foreign markets.

The studio surveyed “The Hunger Games” moviegoers, said Feltheimer, and found that 55 percent of them got “the majority of the information about their movie” online.

“That made me think that the paradigm is changing even faster than we thought,” he said.

(Reporting By Ronald Grover; Editing by Tim Dobbyn)

SAN FRANCISCO (Reuters) – Facebook Inc aims to raise about $10.6 billion in Silicon Valley’s largest IPO, dwarfing the coming-out parties of tech companies like Google Inc and granting the world’s largest social network a market value close to Amazon.com’s.

The eight-year-old social network that began as Mark Zuckerberg‘s Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, which would value the company at $77 billion to $96 billion.

The size of the IPO reflects the company’s growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce.

“We certainly haven’t ever seen a tech IPO on this grandiose a scale,” said Lise Buyer, a principal with the IPO advisory firm Class V Group.

Buyer, who worked on Google’s 2004 IPO, said the question about a company “that’s already this big and that is raising this much money is how many of the glory days of growth are in the past versus how many are ahead.”

Facebook stands to raise as much as $12 billion at the upper end of its planned range. If an over-allotment or “greenshoe” option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.

Facebook is only getting about half, or $5.6 billion, of the estimated $10.6 billion that it would raise at the midpoint of its planned IPO range. About $4.9 billon will go to some existing shareholders.

Facebook’s stock could begin trading as soon as May 18, according to a road show schedule obtained by Reuters. The offering’s price range can be adjusted depending on Wall Street’s response during the road show.

Investors are expected to flock to the highly anticipated IPO, although there have been growing concerns about the social network‘s longer-term growth and Zuckerberg’s majority control.

Facebook will trade at 13 to 16 times the revenue that GreenCrest Capital analyst Max Wolff believes it will generate this year. By comparison, Google, the world’s dominant Internet search engine, currently trades at 5.5 to 6 times expected 2012 revenue, he said.

Google’s valuation was higher when it went public in 2004, though Facebook’s IPO valuation is still higher than Google’s was back then, Wolff noted.

But some observers said the rich premium was unlikely to deter investors.

“People are going to be very comfortable with this valuation,” said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200 million. The firm is not selling in the IPO.

“A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand,” he said.

“The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot.”

Facebook executives are due to hit the road on Monday, presenting their investment case to audiences. They will start in New York, go to other major cities such as Chicago and Boston, and end up on Facebook’s home turf in Menlo Park, California, according to the schedule.

Zuckerberg is expected to participate in the two-week road show, a source has said, although Chief Operating Officer Sheryl Sandberg and Finance Chief David Ebersman will lead the briefings.

TANTALIZING WALL STREET

Zuckerberg’s involvement in the road show will be key for investors with concerns about Facebook’s long-term strategy and money-making potential, said Brian Wieser, an analyst with Pivotal Research Group.

Zuckerberg’s control of the company — which was underscored when he orchestrated the $1 billion acquisition of mobile app maker Instagram last month — means that investors need to “get comfortable” with the 27-year-old CEO, said Wieser.

Last week, Facebook reported its first quarter-to-quarter revenue slide in at least two years, a sign that the social network’s sizzling growth may be cooling just as it prepares to go public. Some observers have also flagged the company’s lack of revenue on mobile devices such as smartphones as an area of concern.

Dressed in a gray t-shirt and jeans, the copper-haired Zuckerberg appeared in a 31-minute road show video posted online on Thursday. In the video, Zuckerberg predicted that in five years almost every software app would be integrated with Facebook.

Facebook generated the lion’s share of its $3.7 billion in revenue last year from online advertising. It also collects fees when consumers use its special Credits currency to purchase virtual goods in social games such as Zynga’s Farmville. The company has said it may expand the use of its payment business beyond games.

Facebook, which plans to list its stock on the Nasdaq under the ticker “FB”, has long tantalized investors with the prospect of a mega IPO.

As a private company, shares of Facebook have traded briskly in secondary markets for the past couple of years, as investors sought to get a piece of the fast-growing company ahead of its expected IPO.

The IPO price range indicated in Facebook’s filing on Thursday would value the company a hair below the level it has traded at in the secondary markets in recent months, with some trades valuing the company at slightly more than $100 billion.

But some investors think Facebook, which touts 900 million users worldwide, is setting itself a fairly conservative target.

“The price range may be tactical. They will likely walk the range up,” Schwerin argued.

Facebook plans to sell 337.4 million shares, or 12.3 percent of the company, in the offering. The capital-raising target far outstrips big Internet IPOs that came before it. Google raised just shy of $2 billion in 2004, while last year Groupon tapped investors for $700 million and Zynga raked in $1 billion.

At the top end of the IPO range, Facebook would rival the market value of Amazon.com and Cisco Systems Inc, which are worth just over $100 billion, and surpass the combined market value of older technology companies Hewlett-Packard Co and Dell Inc.

Among existing shareholders, the largest seller in the IPO will be venture capital firm Accel Partners, which will make about $1.2 billion assuming the shares sell at the $31.5 mid-point. Zuckerberg is selling the next largest chunk of shares, worth a little under $1 billion.

Facebook said that a “substantial majority” of the proceeds from Zuckerberg’s stock sale will be used to satisfy taxes he will incur from exercising his options.

In its prospectus, Facebook said the “lock-up” period, during which employees cannot sell shares after the IPO, would range from 151 days to 181 days.

Facebook also added two new underwriters, including online broker E*Trade Securities. The broker caters to retail clients who some have speculated may try to pile into the IPO.

“No doubt Facebook doesn’t want to upset the average mom and pop out there,” said Craig Huber, research analyst, at independent research firm Huber Research Partners.

(Writing By Edwin Chan, additional reporting by Poornima Gupta, Gerry Shih and Sarah McBride in San Francisco and Olivia Oran in New York; Editing by Gerald E. McCormick, Bernadette Baum, Matthew Lewis and Richard Pullin)

(Reuters) – Amazon.com agreed to begin collecting sales tax in Texas on Friday, forging a deal that promises to bring more jobs to the southern U.S. state and as the online marketer lost another round in a series of state-by-state sales tax battles.

The agreement, to take effect on July 1 for Texas’ 6.25-percent sales tax, follows another accord reached with Nevada earlier in the week to begin collecting that state’s 8.1 percent sales tax on January 1, 2014.

Amazon rings up an estimated 20 percent of all U.S. online retail sales, making it the country’s largest online retailer.

Most online purchases are free of sales tax, which has given the company an edge over traditional, bricks-and-mortar retailers that do collect sales tax.

As online sales have grown, and municipal budgets have tightened, states have been pushing hard to capture more e-tail sales tax revenue.

Under federal law, retailers with physical facilities in a state can be forced by the state to collect sales tax on purchases made by a resident of that state. That includes e-tailers with distribution centers. E-tailers without physical facilities in a state need not collect the tax.

BEST TAX TERMS

As Amazon has grown, it has needed more distribution facilities, and in the past few years has parlayed the promise of new facilities in exchange for the best tax terms possible with states across the country.

The importance of that advantage was clear when Amazon pulled up stakes in Texas last fall, shutting down its distribution hub at the Dallas-Fort Worth airport after Texas State Comptroller Susan Combs sent Amazon a $269 million bill covering sales taxes it did not collect from 2005 to 2009.

In exchange for Amazon’s promise to collect future taxes, create at least 2,500 jobs and make at least $200 million in capital investments in the Lone Star state, Combs is dropping the demand for back taxes.

Texas will bring to six the number of states where Amazon currently collects sales tax.

According to its website, it already collects sales tax in five of the 50 states — Kansas, Kentucky, New York, North Dakota and Washington — on purchases made by people who live in those states. Those are the five states where it has physical facilities or affiliated sellers and no agreement with state governments exempting Amazon from collecting sales tax.

A comprehensive federal solution to the question of which companies must collect sales tax on online purchases has yet to reach a vote in Congress.

In announcing the deal with Texas, Amazon’s Vice President of Global Public Policy, Paul Misener reiterated the company’s support for a national solution.

On Thursday, Amazon reported net sales of $13.18 billion for the first quarter of 2012, up 34 percent from the same quarter last year, with net income of $130 million.

(Reporting By Nanette Byrnes; Editing by Howard Goller and Kevin Drawbaugh)

(Reuters) – Amazon.com agreed to begin collecting sales tax in Texas on Friday, forging a deal that promises to bring more jobs to the southern U.S. state and as the online marketer lost another round in a series of state-by-state sales tax battles.

The agreement, to take effect on July 1 for Texas’ 6.25-percent sales tax, follows another accord reached with Nevada earlier in the week to begin collecting that state’s 8.1 percent sales tax on January 1, 2014.

Amazon rings up an estimated 20 percent of all U.S. online retail sales, making it the country’s largest online retailer.

Most online purchases are free of sales tax, which has given the company an edge over traditional, bricks-and-mortar retailers that do collect sales tax.

As online sales have grown, and municipal budgets have tightened, states have been pushing hard to capture more e-tail sales tax revenue.

Under federal law, retailers with physical facilities in a state can be forced by the state to collect sales tax on purchases made by a resident of that state. That includes e-tailers with distribution centers. E-tailers without physical facilities in a state need not collect the tax.

BEST TAX TERMS

As Amazon has grown, it has needed more distribution facilities, and in the past few years has parlayed the promise of new facilities in exchange for the best tax terms possible with states across the country.

The importance of that advantage was clear when Amazon pulled up stakes in Texas last fall, shutting down its distribution hub at the Dallas-Fort Worth airport after Texas State Comptroller Susan Combs sent Amazon a $269 million bill covering sales taxes it did not collect from 2005 to 2009.

In exchange for Amazon’s promise to collect future taxes, create at least 2,500 jobs and make at least $200 million in capital investments in the Lone Star state, Combs is dropping the demand for back taxes.

Texas will bring to six the number of states where Amazon currently collects sales tax.

According to its website, it already collects sales tax in five of the 50 states — Kansas, Kentucky, New York, North Dakota and Washington — on purchases made by people who live in those states. Those are the five states where it has physical facilities or affiliated sellers and no agreement with state governments exempting Amazon from collecting sales tax.

A comprehensive federal solution to the question of which companies must collect sales tax on online purchases has yet to reach a vote in Congress.

In announcing the deal with Texas, Amazon’s Vice President of Global Public Policy, Paul Misener reiterated the company’s support for a national solution.

On Thursday, Amazon reported net sales of $13.18 billion for the first quarter of 2012, up 34 percent from the same quarter last year, with net income of $130 million.

(Reporting By Nanette Byrnes; Editing by Howard Goller and Kevin Drawbaugh)

(Reuters) – Groupon Inc has hired another former eBay Inc executive to head its discount retailing arm Groupon Goods starting Monday, according to an internal email obtained by Reuters on Friday.

The online coupon company named Faisal Masud to head the unit. Masud, who was head of global delivery experience at eBay, will report to Kal Raman, whom Groupon named head of its Americas region on Thursday.

Masud takes over from Rajen Ruparell, who was in charge of the division and will move into a global sales leadership role, Chief Executive Andrew Mason said in the email.

Groupon Goods is one of the company’s newer businesses, and its first foray into more traditional e-commerce, dominated by Amazon.com Inc.

Through this unit, the company offers discounts on products, along with its regular daily deals, which typically focus on restaurants and services like massages and yoga classes.

Groupon Goods has seen some initial success, although some analysts note that profit margins on the business may be thinner than on Groupon’s main daily deal business.

(Nivedita Bhattacharjee in Chicago, additional reporting by Alistair Barr in San Francisco; Editing by Gerald E. McCormick)