Will GOOG Woes Push Facebook's Zuckerberg Out As CEO?
By Tom Foremski - January 31, 2008
In a conference call with financial analysts following its Q4 financial report, Google said it is having problems monetizing social network sites.
Google earnings miss Wall Street estimates By Elinor Mills News.com
... the company had trouble making money off ads on social networking sites, including News Corp.'s MySpace, Google executives said. Under the MySpace deal, Google is committed to paying revenue even if advertisers don't click on ads.
"We have found that social networking inventory is not monetizing as well as expected," said Chief Financial Officer George Reyes.
This increases the challenge for Facebook as it searches for a way to monetize its service without alienating its users. Microsoft's recent investment in Facebook values it at $15bn, raised the pressure on management to justify that valuation.
This is a challenging situation for any CEO of a large media business, especially a 23 year old with no prior experience. Figuring out a sustainable business model that meets Facebook's $15bn-plus valuation is a top priority for Facebook's investors.
They will likely seek to bring in a new CEO with more experience in the same way Eric Schmidt was brought in to Google.
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Comments (2)
"pressure on management to justify that valuation"
This continues to be the main issue. Does social activity really equate to business/corporate valuation? The approach of Facebook to generate users with the "revenue will come" perspective seems to replicate the failed attempts of start-ups past.
Posted: February 23, 2008 10:01 PM
Scott: You make a fair point... But because they are all startups, they all build something on the hope that "revenue will come." What other strategy can they have? MSFT determined that that valuation was fair because it made its own estimates of how much future value Facebook could generate. However, such a strategy could also be used to raise the bar for Facebook... I'm not saying that MSFT intended to do this for any nefarious reasons, but a small investment at a high valuation could set up any company for a performance expectation that increases its risk of failure.
Posted: February 24, 2008 11:32 AM