Sponsorship Link
Just about all of Facebook's 845 million members are salivating at the prospects of seeing their company go public. Facebook wants to raise $5 billion and value itself at $100 billion.
/
Go figure. At that level, Mark Zuckerberg's vehicle would be valued not much below Cisco Systems, the No. 1 provider of Internet gear, Verizon Communications, the No. 1 wireless carrier, and only $39 billion below Intel, the No. 1 chipmaker.
Is Zuckerberg crazy? How about his future shareholders?
The reason is that Facebook, now in the old offices of Sun Microsystems in Menlo Park, Calif., is a financial underperformer. The initial public offering documents say that last year, Facebook's net income was only $1 billion on revenue of $3.71 billion.
Must Read
Surely, with 845 million users, Facebook's revenue ought to be higher. Just think of the data users voluntarily provide and how valuable it is to advertisers and the company!
Follow us
Two Facebook partners, which enjoy free access on Facebook and are already public, don't make money at all: Zynga, the San Francisco-based gaming specialist, reported last week its fourth-quarter net loss was $435 million, or $1.22 a share, reversing prior-year income of $16.1 million, or 5 cents. The figures include $510 million in compensation expenses, which weren't recognized until the IPO.
Facebook derived 12 percent of income from Zynga before the IPO.
Dating site SNAP Interactive also reported a big loss. The New York-based lonely hearts club reported on Valentine's Day its fourth-quarter loss swelled to $1.4 million, or 4 cents a share, more than triple the prior-year loss of $400,000, or a penny. Revenue doubled to $5.5 million.
Co-founder Darrell Lerner, at least, got married just days before SNAP Interactive's AreYouInterested app appeared on Facebook.
While it may not have had an Oscar-nominated movie made about it, Jive Software, the business social network in Palo Alto, Calif., also reported a fourth quarter net loss that nearly doubled to $12.7 million, or 39 cents as revenue jumped 53 percent to $22.5 million.
The company forecast a 2012 loss, too.
And LinkedIn, the Mountain View, Calif.-based professional networker? It reported decent income. Net rose 30 percent to $6.9 million, or 6 cents, as revenue more than doubled to $168 million.
LinkedIn has about 150 million members, all professionals, and derives about 20 percent of its revenue from so-called "premium" subscribers.
So it makes one wonder how Zuckerberg can value Facebook so high.
