Fast growth…sometimes bites you in the ass. 450 to 1,000 employees. Is Facebook really what it’s cracked up to be? $15 billion…

Uh oh. What jumps out of their finances is that they have expanded their headcount so fast and continue to do so without yet having the business to back it up.

They obviously need to squeeze every penny out of their visitors to justify 15 billion level+ valuations come 2009.

Countdown to reading the reasons why Facebook is the exception this time, why they don’t need to make money to be worth $15bln, etc…

Also just as a rule of thumb, Facebook is not worth $15bln until the company is sold for that or a serious amount of stock is sold at that valuation. Until then, it was valued at $15bln for a few specific transactions, like MS getting the ad gig. There is a world of difference.

Seems more like a deliberate “leak”.

I don’t work TEchcrunch. Is Duncan really gay?
His article sounds so gay.

Does Duncan love Mike ?
I like to see Techcrunch drama. Mike slap red roses away from Duncan.
HAHAHA. Duncan claims he’s isn’t gay.

If you want to marry mike. Who is stopping you?
No one.

how credible is this?

today while checking facebook on my iphone (iphone app doesn’t display any ads) i was thinking to myself, “how the hell does facebook make any money?”

Who cares… About Facebook revenue.
We like to see Duncan marry Mike.
About the movie “walk the line”

Duncan riley is Johnny Cash
Michael Arrington is June Carter

I like Mike take “no” for answer.

Tripatinder Chowdhry

Global Equities Research.

This was an intentional leak, and is full of disinformation.

Why would you deliberately leak that you are going to lose $150M in cash next year? (Granted, they have lots of cash.)

Especially when most of their 2007 revs come from the (sweetheart) Microsoft ad deal…

Talk about having the rug pulled under their feet, it looks like a bubble is growing and Facebook has to be careful not to burst it. This news will be syndicated by more blogs later and the buzz will ever increase. Do I feel this leak was on purpose? Yes. Do I think the numbers are accurate? No. However, I feel it’ll get people to think about how they valuate Facebook. It hurts, not helps Facebook’s cause to go public in 2009.

150 mil revenue? do you mean they made around 3$ / registered user in the last year?
i dun think so.

and is it gonna make 6$ next year? i doubt it. they are blowing the balloon.

plenty of companies have gone public before turning a profit. amazon comes to mind, and netsuite just went public despite having never turned a profit.

Doesn’t look like a $15billion company to me.

gilltots, amazon sells products, netsuite is a product, what does facebook sell? $.02 CPM advertising that doesn’t convert?

I dont think the street will value FB anywhere close to 5B, let alone 15, unless they pull in some serious cash in 2008. Can you see the FB empire crumbling?
Look at all the people in their wake.

1,000 employees? Doing what?

The numbers reflect a more-realistic (versus-dreamy) financial outlook by Mark and rest of the management. Projected revenue growth is a result of the natural growth and optimization without taking into account any foreseen breakthrough in social networks monetization, which is the current case.

If Facebook wants to do a successful IPO sometime in 2009, they have to put more money and work into monetization research, trying their best to come up with their own version of the Google-Ads business model.

More here http://technozzle.com/?p=76

Right. 1000 employees? I was just about to ask that very same question.

@jimbo -
heh i’m not saying they’ll be able to pull it off, just saying that making a profit is not a prerequisite of going public.

and to answer your other question, facebook sells awkward animatronics. oh wait that’s just zuckerberg. good question, i have no idea what they sell. but as soon as they find a problem for their solution, they’ll be rolling in cash.

They forgot to include $100 million in revenues from Beacon. errr oh wait…..

15B…If this is real, it seems their numbers are more in line with what Microsoft paid for them last year.

Facebook got its lofty valuation based on the promise of Beacon which has to date been a flop. Slowing overall advertising growth in 08, increasing headcount & expenditures, and a fatigued audience is going to make ‘08 the year that FB begins to wither. ‘09 marks the year the deadpool bell tolls.

Not bad actually..

I thought there was a company named ‘Leaked’ (Facebook Finances Leaked) that they were investinging in, until I reread it as the page loaded. Damn beer.

The thing that sticks out for me is $200M for servers?!?!? What are they planning?

they are gonna put their servers on the moon

It seems like a deliberate leak to me also.

Propably they leaked this info, as of the reason I cannot say. However the reliability of these figures is zero. Maybe the idea was to give the market public something to chew on, besides air & expectations.

I have a facebook account and I just don’t see what all the rage is about it. I think linkedin has a much better service and generates less spam type invites.

I agree with everyone else on this board about “the leak.”

@27, not just servers, it’s capital expenditure, including productivity tools for the projected 1000 employees, and intellectual capital manufacturing plants (office buildings), and so on.

Microsoft coughed up $200mln for a 5% in a 150mln company, all I can say kickback! Or they’re dumb. Maybe both.

Yeah right! Please!

This is so obviously deliberate! And the reason it is deliberate is to give a WAY FAKE topline number and topline revenue.

They didn’t make $150 mil… Not from operations they didn’t! Nope, not buying it. That’s some bad fish right there. Send it back.

2008 Revenues: $300 to $350 million (projected) Hahaha… that’s rich!

Gimme a break. They can just get on with their low-budget 12 cent CPM ass.

I truly believe the revenues are overestimated.

After the rise in 2007, the fall of Facebook in 2008, accelerated by the coming crisis of the advertising market in the US?

If I remember the last NWS earnings call correctly, I think Murdoch/Chernin projected more gross profit from MySpace in 2007 than Facebook’s top line.

FB is like one property of Google/Yahoo, why do they need 1000+ people to do one site which basically generate all contents by its users? This looks like they want to pump up the fat before get acquired, quite a common strategy for startups.

How about adding some value for us and slicing and dicing, dividing financial metrics by operational ones, member/traffic/growth ones, etc. That type of thing? Or is that coming in a follow up post. I’d do it but kind of crazy busy today. Cheer and keep up the great work… and have a great weekend!

PS: If it was an open call in, then that smells like “leaked on purpose” (or else kind of stupid).

The figures sound deliberately ‘leaked’. Maybe they even didn’t have an all-hands meeting.

The revenue sounds like it includes some of the investment money given by MS, which it shouldn’t have.

The start ups that I know of are very, very tight lipped about their actual revenues & profits and especially burn rate, and like to discuss about projections instead of actual numbers.

When a start up does something fishy like this, it is a red flag, and a big one given the money invested in the company already.

I don’t think facebook will die, but it may go stale like myspace. And I’m skeptical that they’ll be able to maintain their headcount. Also, they better figure out how to monetize fast or function with a reduced headcount. I don’t see why they need so many people.

Facebook just had an epic fail. Way to capitalize on the world’s most comprehensive marketing database; they can’t even out-pace a fucking video game.

The projected headcount seems way exagerated. As long as I don’t have a source, I don’t believe the numbers.

Is nothing confidential anymore. Employees who leak documents should be fired and made to pay for the potential losses. I am sick of leaks appearing on sites like Techcrunch and no one calling it out.

What would Arrington do if his company confidential plans appeared on the web. Swisher should be made to reveal her sources and that person sacked from FB.

probably the reason, why an IPO is not an option…

can’t think of any legitimate reason why a company like facebook should host a call in with its employees and discuss figures like this.

@44,

It was Zuckerberg himself. Did you not read the article?

Microsoft will at some point but the rest of FaceBook, wont they?

yawn

When Microsoft acquired Hotmail, they paid $400M - approximately $40 per user - and Hotmail was not profitable. Companies looking to invest in / acquire a company like Facebook are not necessarily concerned with current revenues, rather future potential exploitable value of their user base. Was MySpace profitable when News Corp. bought it for $580M? No.

Public valuations can be based on 2 elements: a factor on earnings; or perceived future value. Facebook could benefit from perceived value when they go to IPO, and that’s what many of these public co’s live by. and die by of course.

even Google has an outrageous price/earnings ratio of 45-50.

@steve

agreed.
every software/web based company has some ridiculous p/e ratio. even apple is only at ~30 now and I believe and was around 60 or something only a couple years ago before iPod/macbook popularity.

STEVE: That is why OpenID and DataPortablity is a bad idea.. “rather future potential exploitable value of their user base. ” WHERES THE VALUE OF ANY COMPANY IF ALL THE DATA IS ACCESSIBLE FREE OF CHARGE?

They are hiring an executive chef, they have puzzles you have to email to some mysterious email you have to figure out using a calculator.

These guys are cheeseballs. Can they be any more un-original.

facebook has developed many and good applications, that they have taken it to be a complete SB. I imagine that to develop it needs them many programmers and Web masters.

The MSFT bid for Yahoo today was 6.37x revenue. That applied to FB would be $955 million valuation based on 2007 revenue and $1.9 billion valuation based on the high end of their 2008 projections. FB’s higher growth would likely fetch them more, just giving some baseline perspective.

what would be interesting to know is Microsofts loss for the guarantee revenue to FB. For example- they are guaranteeing roughly $100m per year to FB but what is the true value of the FB traffic. I have the feeling it’s far far less- close to 1/4th that. It’s tough to validate a buisiness that is building revenue off of non-substantial cash flow. Be fun to learn ‘true’ value of fb right now…

This info along with the confession by Google yesterday on lower than expected revenue from social networking advertising does not bode well for Facebook (or any other social networking sites) current valuation of $15B. I predict a rapid descent to valuation reality in the near term for social networking sites.

most of you guys dont see the picture here…Facebook is working on something bigger and most of these investors know it.
By releasing the numbers via the blogging community, they knew exactly what they were doing..giving the impression that things might not work as it was expected..but I dont buy it..

You’ll see..they’ll release something major by the end of the year or probably in 2009..followed by an IPO !!

I also do not buy the figure of $200M for servers. Their team couldn’t purchase/deploy that many servers in 2008 if they started tomorrow and didn’t stop until December 31st, 2008.

The message here is simple and the leak was clearly planned.

Facebook isn’t going to have a very good 2008. Because of their ‘odd’ partnership with Microsoft, they now have stock options priced at a discount to $15B — not very appealing to a savvy employee. Now, it looks like we’re about to head into a recession. Facebook probably knew their “bad” losses would leak out, causing their employee base to grow concerned.

So, what to do? Sure — let’s tell everyone we’re buying servers. They’ll all believe that cuz almost no one understands IT, etc.

Clever, but I’m not fooled. Facebook doesn’t have enough traffic to justify $50M in IT spending let alone $200M in spending.

Jenkins :
“Clever, but I’m not fooled. Facebook doesn’t have enough traffic to justify $50M in IT spending let alone $200M in spending.”

exactly..one point here is about their traffic that just dont justify it but what if they were working on something that will need those servers.
You know what I’m talking about

We’ve crunched the numbers and FB is actually worth $30B!!! LOL

http://topoilstocks.org/. Facebook could benefit from perceived value when they go to IPO, and that’s what many of these public co’s live by. and die by of course.

So 17% of last years revenues were from 25 million $1 gifts. Looks like I’m on the right track then with my app….sitting….finished…..waiting for facebook wallet to go into production.

Tell me one thing that Facebook does well. The problem with social networking sites is no one knows how to monetize them. From an advertiser perspective performance is piss poor and I mean piss poor. Any decent investor should be aware of this.

They are in some respects, similar to Yahoo!, they have tons of visitors/users but can’t monetize them effectively. They’re also hiring like banshees for a reason I can’t figure out. If they have something bigger they better release it soon….negative cash flow and poor monetization are big issues.

My feeling is that Mark Z. should have sold this crap a long time ago. Going nowhere fast while the little guys catch up and money goes out the door.

The media itself should be ashamed for pimping Facebook so much last year — which drove it to that RETARDED $15B valuation in the first place.

Facebook is a JOKE. It’s certainly worth a lot but nowhere near what many think.

Why? NO COMPETITIVE ADVANTAGE.

Internet users are SUPER FICKLE. The newness of Facebook will wear off and users will be flocking to some other new social communication app.

Facebook will certainly continue to add new features and we’ll have millions using it for many years to come, but nothing that will create BILLIONS in value.

MARK ZUCKERBERG = THE NEXT SHAWN FANNING

over hyped. microsoft bought facebook banner space as part of the oct2007 investment deal. microsoft over paid for the ad space just to be in bed with facebook. everyone knows that social sites traffic does not convert…. saying that the prices microsoft paid for ads in facebook reflect market price and could be earned in the future is naive.

FB will wither in US/Canada, but with the language versions shipping, it’s going to get most of it’s growth from outside North America…perfect platform for MS advertise globally. The Value Proposition that FB has over it’s competitors like MySpace and Google is its information..and the ability of advertisers to target very specifically based on the info of FB profiles and all those stupid apps, and the information people put on their walls. It’s a marketing goldmine. Be prepared to be exploited.

Zuckerberg should have taken the Google $2.3 bil and not listened to Peter Thiel, who personally believes the company is worth $8 bill. His paltry $12.7 million is now worth $1.65 bill. He should have taken the money and ran…now he’s going to tank with Zuckerberg before they get the IPO off the runway.

this sucks!

Well, I don’t know..