Facebook - Part 2

FACEBOOK – PART 2

Once a boy posted pictures of his friends and fellow students of Harvard online just to get reviews, comments and likes from the viewers and that chocolaty boy with a spark in his eyes is Mr. Mark Zukerberg and his by chance experiment in now days know as Facebook. The idea has already been flourished and more than 900 million linkages to facebook has already made Mr. Zukerberg a millionaire and soon he will be billionaire.

Now a days investor’s silver spoon can be Facebook. Facebook has initially announced the plans of an initial public offering (IPO) that value around $5 billion but according to recent stats facebook has announced the raise for $18.4 billion, which is the largest floatation made ever by an internet company and is the first U.S Company to be worth more than $100 billion at its debut. The share costing of facebook is initially estimated to be around $34 but it has also risen to $38. It is not wrong to say that Facebook is now among the tech giants like Google, Microsoft and Apple though their market capitalization is $190 billion, $250 billion, and 425 billion respectively and Facebook’s valuation is $104 billion which is comparable to the market worth of Amazon and exceeding that of H.P (Hewlett Packard) and Dell, but the fact that only 8 year old company has such a worth cannot be ignored and which could be a hiccough for the tech giants.

Facebook’s last year’s total earnings are estimated to be about $3.7 billion and a net profit of about $1 billion. The network has the third largest population (900 million users) in the world after China and India. The reason for such a success of facebook is to provide people what they want and what was missing in their life i.e. socialization in their busy life and facebook makes it easier and simpler and most importantly at any time anywhere because of enabling facebook on mobiles and tablets and that too with a high speed and comfort.

Another reason for facebook success is Social Advertisement and the revenue collected from advertisements. Around 85% of the revenue is collected from the ads and it is going to increase much more in the coming future because facebook is planning to launch ads in the mobile and tablet versions also. Mr. Hussein Fazal, the chief executive of AdParlor, which manages Facebook’s ads, believes that revenue from facebook ads will surprise Google soon which has a revenue of about $40 billion from ads.

It’s not so that all the days in future will be sunny for the facebook, some could be rainy too on which facebook has to do homework in advance. One recent fact of Facebook’s down market is the concept of timeline and forcing the people to adopt timeline and once it is on your profile you cannot get rid of it which reduces the market value of the company. Once the youth is angry, then it would be very difficult to put back the train on to rails.

Another issue occurred with the America’s Federal Trade (FTC). They were receiving the complaints that facebook is making the user’s data public which suppose to be private. In settlement facebook agreed to submit its privacy policies every two years for the next 20 years. So privacy is the biggest concern for facebook as daily 250 million photos are uploaded on the site and every seventh minute spent on internet is on Facebook. In many countries governments are paying high attention towards the privacy policies of Facebook. Facebook should not think only in terms of money but in this direction also. Another issue is the ban of facebook in China. Being the most populated country, if facebook is able to find a way to fill this social hole then the profits will be unimaginable.

(The stats written in this article are till 19th of May 2012.)