Facebook Deal


Image representing Facebook as depicted in Cru...

Image via CrunchBase

Facebook, the world’s largest social network, announced in July 2010 that it had 500 million users around the world. The company has grown at a meteoric pace, doubling in size since 2009 and pushing international competitors aside. Its policies, more than those of any other company, are helping to define standards for privacy in the Internet age.

The company, founded in 2004 by a Harvard sophomore, Mark Zuckerberg, began life catering first to Harvard students and then to all high school and college students. It has since evolved into a broadly popular online destination used by both teenagers and adults of all ages. In country after country, Facebook is cementing itself as the leader and often displacing other social networks, much as it outflanked MySpace in the United States.

But it has also come to be seen as one of the new titans of the Internet, challenging even Google with a vision of a web tied together through personal relationships and recommendations, rather than by search algorithms. In a major expansion, Facebook has spread itself across other websites by offering members the chance to “Like” something — share it with their network — without leaving the web page they’re on.

In November 2010, Mr. Zuckerberg introduced Facebook Messages, a new unified messaging system that allows people to communicate with one another on the Web and on mobile phones regardless of whether they are using e-mail, text messages or online chat services.

In January, 2011, Facebook raised $500 million from Goldman Sachs and a Russian investor in a deal that values the company at $50 billion — more than companies like eBay, Yahoo and Time Warner. The stake by Goldman Sachs, considered one of Wall Street’s savviest investors, signals the increasing might of Facebook, which has already been bearing down on giants like Google.

But in a surprise move, Goldman said on Jan. 17 that it was limiting its offer to foreign clients because of worries that the deal could run afoul of securities regulations. The decision was considered a serious embarrassment for the bank, which had marketed the investment to its wealthiest clients, including corporate magnates and directors of the nation’s largest companies.

Mr. Zuckerberg had sought to keep close control over the company, spurning a $1 billion offer from Yahoo in 2006 and playing down the idea of a stock offering. But in the wake of the Goldman investment, Facebook said that it will begin reporting its financial results by April 2012, setting the stage for a likely IPO.

The company, based in Palo Alto, Calif., earned $355 million on $1.2 billion in revenue during the first nine months of 2010, according to a document prepared by Goldman for potential investors. That is up from $220 million in earnings on $770 million in sales in 2009.

Like other social networks, Facebook allows its users to create a profile page and forge online links with friends and acquaintances. It has distinguished itself from rivals, partly by imposing a spartan design ethos and limiting how users can change the appearance of their profile pages. That has cut down on visual clutter and threats like spam, which plague rivals. It has decisively outstripped other networks that preceded it, like MySpace and Friendster, becoming what many analysts see as the “default platform” of a new age of information organized around personal relationships.

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2 thoughts on “Facebook Deal

  1. Pingback: New Idea For Facebook « heartchasms

  2. Pingback: Facebook Deal | pelangi-infobiztech

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