Facebook on Line 1
Kara Swisher had an item about Mark Zuckerberg discussing Facebook (a private company) financials on a public dial-in number, and doing it pretty much on his own.
Revenue for Facebook for 2007 will be $150 million, as has been widely reported. But for 2008, Zuckerberg projected revenue to be increased to $300 million to $350 million.
More interesting was the news that Facebook would spend $200 million next year on capital expenditures, which is a whole lot of servers.
By the way, more expenses, noted chatty Mark, those employee levels would rise to more than 1,000 in 2008 from 450 now.
And Zuckerberg also said the company’s EBITDA–earnings before interest, taxes, depreciation and amortization and a number widely used by Wall Street as an indication of operating performance–would be $50 million in 2008.
That means the company would have a negative cash flow of about $150 million (EBITDA minus CapEx), rather than break even, as it does now.
But who’s counting? Zuckerberg apparently said he did not care about maintaining EBITDA anyway.
That’s because Facebook collected $300 million in investments recently from Microsoft and other investors, which pegged the valuation of the company at $15 billion.
Sounds like a guy with a lot of hubris — I’m sure if Facebook was a public company, they would have some ridiculous market capitalization (at least late last year). I wonder what full year income for 2007 was, that’s noticeably absent from this informal report. The mention of EBITDA for 2008 but no net earnings number is kind of suspect, too. I’m guessing this is another indicator that social networking, along with Google’s admission that it hasn’t turned into much of a revenue stream, is not something that will be very easy to milk. There’s something really unattractive about mixing social aspects with marketing and advertising so bluntly, sort of like that guy that all your friends call “the car salesman” and who’s completely ingenuine about his motives in his friendships. I think people’s natural distaste for that will keep this market a lot smaller than businesses expect — call it the social networking bubble. I’m curious to know what children who grow up in this ad-heavy online environment will think; I remember media classes in my high school where students were taught how to analyze commercials for their hidden aims and such — will kids of this era need such training or will most be skeptics? Will they be more susceptible and more accepting of this kind of marketing? One thing I find interesting in all the talk about the growth of online ad markets is that no one talks about AdBlock (the Firefox plug-in that prevents various advertising from being shown in-browser) and its amazing effectiveness. Perhaps, like GMail with it’s approximately 3% capture of the market, it’s something that seems like everyone should be using if you actually use it, but if you haven’t then you just stick to the status quo (i.e. Hotmail or browsing sites with garish banner ads sandwiched between paragraphs).
