When it comes to social networking, it's wise to put your best face forward. Facebook, the social networking juggernaut, lets users share information, post photos and videos, play games, and otherwise connect with one another through online profiles. The site, which allows outside developers to build apps that integrate with Facebook, boasts more than a billion total users. The firm was launched in 2004 by Harvard student Mark Zuckerberg as an online version of the Harvard Facebook. (The name comes from books of freshmen's faces, majors, and hometowns that are distributed to students.) In 2012 Facebook began publicly trading after filing one of the largest IPOs in US history.
The company and its underwriters priced shares at $38, valuing Facebook at a staggering $104 billion. The deal represented the biggest technology IPO to date and the third biggest IPO ever (behind General Motors and Visa).
Global in its reach, Facebook generated almost half of its revenue outside the US in fiscal 2012. The majority of its international business comes from customers located in western Europe, Canada, and Australia. The company sees Brazil and India in particular as key sources of growth. As emerging markets, they suffer from less social media saturation, and Faceook can also benefit from their large populations.
Facebook has experienced exponential growth over the past few years, enabling it to dominate the social networking world as the most trafficked site of its kind in the US. Its revenue of more than $5 billion in fiscal 2012 represented an increase of nearly $2.4 billion, compared to its 2011 take. Net income suffered, however, due to higher operating expenses, acquisitions and other large investments, and costs related to its IPO.
Facebook owes the bulk of its growth to its ability to lure more and more visitors to its site and keeping them engaged. The site then stores data about its users and sells that info to advertisers and marketers. The growth in Facebook's advertising business, driven by mobile ads customized for individuals, has been staggering.
Mergers & Acquisitions
In 2012 Facebook announced its largest acquisition to date -- the purchase of Instagram for a whopping $1 billion in cash and stock. Facebook has been slower in developing its mobile services, and Instagram has developed a popular mobile photo-sharing app, famous for its filters that give digital photos an "old-timey" look. Instagram is attracted to Facebook's large user base, which it will use to spread its app and brand to more people. Instagram has about 30 million iPhone users; it added an Android offering just a week before the Facebook acquisition announcement, and received more than a million Android users in 12 hours.
Facebook's IPO made billions for its investors. Zuckerberg owns more than 65% of the company (with 54% voting power). His former roommate at Harvard, Dustin Moskovitz, owns about 10%.