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Facebook, Inc.

Facebook, Inc.
TypePublic
Traded asNASDAQ: FB
IndustryInternet
FoundedCambridge, Massachusetts, United States (2004 (2004))
Founder(s)
  • Mark Zuckerberg
  • Eduardo Saverin
  • Andrew McCollum
  • Dustin Moskovitz
  • Chris Hughes
HeadquartersMenlo Park, California, United States
Area servedUnited States (2004–2005)
Worldwide (2005–present)
Key peopleMark Zuckerberg
(Chairman and CEO)
Sheryl Sandberg
(COO)
ProductsFacebook
ServicesSocial networking services
Revenue US$ 5.08 billion (2012)[1]
Operating income US$ 538 million (2012)[1]
Net income US$ 053 million (2012)[1]
Total assets US$ 15.10 billion (2012)[1]
Total equity US$ 11.75 billion (2012)[1]
Employees4,619 (2012)[2]
SubsidiariesInstagram
Websitenewsroom.fb.com

Facebook, Inc. is an American multinational Internet corporation which runs the social networking website Facebook. After having been privately owned by Mark Zuckerberg and other founders, and the shared ownership having been contested in the meanwhile, Facebook eventually filed for an initial public offering on February 1, 2012, and was headquartered in Menlo Park, California.[1] Facebook Inc. began selling stock to the public and trading on the NASDAQ on May 18, 2012.[3]

Contents

History

Mark Zuckerberg wrote Facemash, which was the predecessor to Facebook, on October 28, 2003, while attending Harvard as a sophomore. According to The Crimson, the site was comparable to Hot or Not, and "used photos compiled from the online facebooks of nine houses, placing two next to each other at a time and asking users to choose the 'hotter' person".[4][5]

Mark Zuckerberg co-created Facebook in his Harvard dorm room.

To accomplish this, Zuckerberg hacked into the protected areas of Harvard's computer network and copied the houses' private dormitory ID images. Harvard at that time did not have a student "facebook" (a directory with photos and basic information), though individual houses had been issuing their own paper facebooks since at least the mid-1980s. Facemash attracted 450 visitors and 22,000 photo-views in its first four hours online.[4][6]

The site was quickly forwarded to several campus group list-servers, but was shut down a few days later by the Harvard administration. Zuckerberg was charged by the administration with breach of security, violating copyrights, and violating individual privacy, and faced expulsion. Ultimately, however, the charges were dropped.[7] Zuckerberg expanded on this initial project that semester by creating a social study tool ahead of an art history final, by uploading 500 Augustan images to a Web site, with one image per page along with a comment section.[6] He opened the site up to his classmates, and people started sharing their notes.

The following semester, Zuckerberg began writing code for a new Web site in January 2004. He was inspired, he said, by an editorial in The Harvard Crimson about the Facemash incident.[8] On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.[9]

The homepage of Thefacebook on February 12, 2004

Six days after the site launched, three Harvard seniors, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, accused Zuckerberg of intentionally misleading them into believing he would help them build a social network called HarvardConnection.com, while he was instead using their ideas to build a competing product.[10] The three complained to the Harvard Crimson, and the newspaper began an investigation. The three later filed a lawsuit against Zuckerberg, subsequently settling.[11]

Membership was initially restricted to students of Harvard College, and within the first month, more than half the undergraduate population at Harvard was registered on the service.[12] Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes soon joined Zuckerberg to help promote the Web site. In March 2004, Facebook expanded to Stanford, Columbia, and Yale.[13] It soon opened to the other Ivy League schools, Boston University, New York University, MIT, and gradually most universities in Canada and the United States.[14][15]

Facebook was incorporated in mid-2004, and the entrepreneur Sean Parker, who had been informally advising Zuckerberg, became the company's president.[16] In June 2004, Facebook moved its base of operations to Palo Alto, California.[13] It received its first investment later that month from PayPal co-founder Peter Thiel.[17] The company dropped The from its name after purchasing the domain name facebook.com in 2005 for $200,000.[18]

Ownership

The ownership percentages of the company are[when?] as follows: Mark Zuckerberg: 28.2%,[19] Accel Partners: 10%, Digital Sky Technologies: 10%,[20] Dustin Moskovitz: 6%, Eduardo Saverin: 5%, Sean Parker: 4%, Peter Thiel: 3%, Greylock Partners and Meritech Capital Partners: between 1 to 2% each, Microsoft: 1.3%, Li Ka-shing: 0.75%, the Interpublic Group: less than 0.5%. A small group of current and former employees and celebrities own less than 1% each, including Matt Cohler, Jeff Rothschild, Adam D'Angelo, Chris Hughes, and Owen Van Natta, while Reid Hoffman and Mark Pincus have sizable holdings of the company. The remaining 30% or so are owned by employees, an undisclosed number of celebrities, and outside investors.[21] Adam D'Angelo, former chief technology officer and friend of Zuckerberg, resigned in May 2008. Reports claimed that he and Zuckerberg began quarreling, and that he was no longer interested in partial ownership of the company.[22]

Management

Key management personnel comprise Chris Cox (VP of Product), Sheryl Sandberg (COO), and Mark Zuckerberg (Chairman and CEO). As of April 2011[update], Facebook has over 2,000 employees, and offices in 15 countries.[23] Other managers include chief financial officer David Ebersman and public relations head Elliot Schrage.[24]

Revenue

Most of Facebook's revenue comes from advertising.[25][26]

Revenues
(estimated, in millions US$)
YearRevenueGrowth
2006$700152000000000000052[27]
2007$7002150000000000000150[28]188%
2008$7002280000000000000280[29]87%
2009$7002775000000000000775[30]177%
2010$70032000000000000002,000[31]158%
2011$70034270000000000004,270[32]114%

Facebook generally has a lower clickthrough rate (CTR) for advertisements than most major Web sites. According to BusinessWeek.com, banner advertisements on Facebook have generally received one-fifth the number of clicks compared to those on the Web as a whole,[33] although specific comparisons can reveal a much larger disparity. For example, while Google users click on the first advertisement for search results an average of 8% of the time (80,000 clicks for every one million searches),[34] Facebook's users click on advertisements an average of 0.04% of the time (400 clicks for every one million pages).[35]

Sarah Smith, who was Facebook's Online Sales Operations Manager, reports that successful advertising campaigns on the site can have clickthrough rates as low as 0.05% to 0.04%, and that CTR for ads tend to fall within two weeks.[36] By comparison, the CTR for competing social network MySpace is about 0.1%, about 2.5 times better than Facebook's rate but still low compared to many other Web sites. The cause of Facebook's low CTR has been attributed to younger users enabling ad blocking software and being better at ignoring advertising messages, as well as the site being used more for the purpose of social communication as opposed to viewing content.[37]

On pages for brands and products, however, some companies have reported CTR as high as 6.49% for Wall posts.[38] A study found that, for video advertisements on Facebook, over 40% of users who viewed the videos viewed the entire video, while the industry average was 25% for in-banner video ads.[39]

Open source contributions

Facebook is both a consumer and contributor of free and open source software.[40] Facebook's contributions include: HipHop for PHP,[41] Fair scheduler in Apache Hadoop,[42] Apache Hive, Apache Cassandra,[43] and the Open Compute Project.[44]

Facebook also contributes to other opensource projects such as Oracle's MySQL database engine.[45][46]

Mergers and acquisitions

On November 15, 2010, Facebook announced it had acquired the domain name fb.com from the American Farm Bureau Federation for an undisclosed amount. On January 11, 2011, the Farm Bureau disclosed $8.5 million in "domain sales income", making the acquisition of FB.com one of the ten highest domain sales in history.[47]

Offices

Entrance to Facebook's previous headquarters in the Stanford Research Park, Palo Alto, California

Menlo Park Headquarters

In early 2011, Facebook announced plans to move to its new headquarters, the former Sun Microsystems campus in Menlo Park, California.

Facebook Ireland Ltd.

All users outside of the US and Canada have a contract with Facebook's Irish subsidiary "Facebook Ireland Limited". This allows Facebook to avoid US taxes for all users in Europe, Asia, Australia, Africa and South America. Facebook is making use of the Double Irish arrangement which allows it to pay just about 2-3% corporation tax on all international revenue.[48]

Facebook Hyderabad

In 2010, Facebook opened its fourth office, in Hyderabad[49][50][51] and the first in Asia.[52]

Facebook, which in 2010 had more than 750 million active users globally including over 23 million in India, announced that its Hyderabad centre would house online advertising and developer support teams and provide round-the-clock, multi-lingual support to the social networking site's users and advertisers globally.[53] With this, Facebook joins other giants like Google, Microsoft, Oracle, Dell, IBM and Computer Associates that have already set up shop.[54] In Hyderabad, it is registered as 'Facebook India Online Services Pvt Ltd'.[55][56][57]

Though Facebook did not specify its India investment or hiring figures, it said recruitment had already begun for a director of operations and other key positions at Hyderabad,[58] which would supplement its operations in California, Dublin in Ireland as well as at Austin, Texas.

Operations

A custom-built data center with substantially reduced ("38% less") power consumption compared to existing Facebook data centers opened in April 2011 in Prineville, Oregon.[59]

In April 2012 Facebook opened a second data center in Forest City, North Carolina. It is among the most energy efficient data centers of its kind.[citation needed]

On October 1, 2012, CEO Zuckerberg visited Moscow to stimulate social media innovation in Russia and to boost Facebook’s position in the Russian market.[60] Russia's communications minister tweeted that Prime Minister Dmitry Medvedev urged the social media giant's founder to abandon plans to lure away Russian programmers and instead consider opening a research center in Moscow. Facebook has roughly 9 million users in Russia, while domestic clone VK has around 34 million.[61]

Like Button Lawsuit

The company is subject of a lawsuit by Rembrandt Social Media which is also suing AddThis for the use of patents belonging to deceased Dutch Programmer Joannes Jozef Everardus van Der Meer which involve the "Like" button.[62]

Initial public offering

An electronic billboard on the Thomson Reuters building welcomes Facebook to the Nasdaq.

Facebook filed their S1 document with the Securities and Exchange Commission (SEC) on February 1, 2012. The company filed for a US$5 billion initial public offering (IPO), making it one of the biggest in tech history and the biggest in Internet history.[63] Facebook valued its stock at $38 a share, pricing the company at $104 billion, the largest valuation to date for a newly public company.[64] The IPO raised $16 billion, making it the third largest in U.S. history.[65][66] The shares began to be traded on May 18, and though the stock struggled to stay above the IPO price for most of the day, it set a new record for trading volume of an IPO, 460 million shares.[67] The first day of trading was marred by numerous technical glitches that prevented orders from going through.[68] Only the aforementioned technical glitches and artificial support from underwriters prevented the stock price from falling below the IPO price on the first day of trading.[69]

Later, it was revealed that Facebook's lead underwriters, Morgan Stanley (MS), JP Morgan (JPM), and Goldman Sachs (GS) all cut their earnings forecasts for the company in the middle of the IPO roadshow.[70] The stock continued its freefall in subsequent days, closing at 34.03 on May 21 and 31.00 on May 22. A 'circuit breaker' was used in an attempt to slow down the decline in the stock price.[71] Securities and Exchange Commission Chairman Mary Schapiro and Financial Industry Regulatory Authority (FINRA) Chairman Rick Ketchum called for a review of the circumstances surrounding its troubled initial public offering.[72]

Facebooks' IPO is now under investigation and has been compared to pump and dump schemes.[68][70][72][73] In the meantime, a class-action lawsuit is in the works due to the trading glitches, which led to botched orders.[74][75] Apparently, the glitches prevented a number of investors from selling the stock during the first day of trading while the stock price was falling - forcing them to incur bigger losses when their trades finally went through.

Additional lawsuits have been filed due to allegations that an underwriter for Morgan Stanley selectively revealed adjusted earnings estimates to preferred clients. The remaining underwriters (MS, JPM, GS) and Facebook's CEO and board are also facing litigation.[76] It is believed that adjustments to earnings estimates were communicated to the underwriters by a Facebook financial officer, who in turn used the information to cash out on their positions while leaving the general public with overpriced shares.[77]

By the end of May 2012, the stock lost over a quarter of its starting value, which led to the Wall Street Journal calling the IPO a "fiasco."[78]

See also

Companies portal
Internet portal

References

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External links

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(Sebelumnya) Facebook statisticsFacebook, Inc. v. Power Ventur ... (Berikutnya)