Facebook hits 900m users, values itself at $77bn
Published Apr 24 2012, 09:54 BST | By Andrew Laughlin
Facebook now has more than 900m members worldwide, as calculations reveal that Mark Zuckerberg's social network values itself at $77 billion (£47.6bn).
Despite the strong user growth, the eight-year-old company posted a fall in revenue and profits in the first quarter of 2012.
Ahead of a planned initial public offering (IPO) later in the year, Facebook has spent some $500m buying up patents previously owned by AOL from Microsoft.
Facebook, founded in 2004 in Zuckerberg's college dorm room, now has 901m global users, up from 680m in the first quarter of last year.
The social network is expected to continue this growth and pass 1bn members by the end of 2012, particularly if it can work out a way to enter the massive yet state-monitored Chinese internet market.
In the first quarter of 2012, Facebook posted revenue of $1.06 billion, up from $731 million the same quarter last year, but actually down from $1.131 billion during Q4 2011.
Profits were also down, at $205m in the first quarter from $233 million in Q1 2011 and $302 million in Q4 last year. It is thought that 'seasonality' is a factor in the decline, along with an increase in marketing, sales and R&D costs.
Using figures for Facebook's recent $1bn purchase of photo-sharing app Instagram
believes the company values itself at just under $77bn.
Yesterday, Facebook provided specifics on the Instagram
deal, revealing that it was for $300m in cash and "approximately 23 million shares" of common stock.
At a $1bn deal valuation, the stock would be worth $700m, or $30.43 per share, valuing Facebook at £75bn. But sources told Forbes
that the actual share price for Instagram was $30.89 per share, which brings the valuation up to between $76 billion and $77 billion.
This is significantly below the around $100bn that was once mooted for Facebook, but Forbes noted that it could be the firm "low balling" ahead of intense investor interest in the firm's IPO.
However, it may also mean that Instagram secured an acquisition price much closer to the $2bn the firm reportedly had hoped to achieve.
Meanwhile, Facebook has made the significant move of agreeing a deal with Microsoft to purchase a portion of the patent portfolio that the software giant recently bought from AOL.
In the AOL auction, Microsoft secured 925 US patents and patent applications, along with a licence to AOL's remaining patent portfolio (containing 300 additional patents that were not for sale).
Facebook has spent $550 million in cash to obtain ownership of around 650m AOL patents and patent applications, along with a licence to the other AOL patents and applications that Microsoft now owns.
Microsoft will retain ownership of 275 AOL patents and applications, along with a licence to the 650 AOL patents transferred to Facebook.
"Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction," said Brad Smith, the executive vice president and general counsel at Microsoft.
"As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio."
Facebook's general counsel Ted Ullyot added: "Today's agreement with Microsoft represents an important acquisition for Facebook. This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."
Last month, Facebook was hit by a lawsuit from struggling internet giant Yahoo
over alleged infringement of its patents covering various operations, including social network and online advertising.
Facebook later hit back at Yahoo with its own patent lawsuit
, but the firm warned yesterday of the potential danger of legal disputes such as this.
"On March 12, 2012, Yahoo filed a lawsuit against us in the US District Court for the Northern District of California that alleges that a number of our products infringe the claims of ten of Yahoo's patents that Yahoo claims relate to 'advertising', 'social networking', 'privacy', 'customisation', and 'messaging'," said Facebook.
"Yahoo is seeking unspecified damages, a damage multiplier for alleged wilful infringement, and an injunction. We intend to vigorously defend this lawsuit, and on April 3, 2012, we filed our answer with respect to this complaint and asserted counterclaims that Yahoo's products infringe ten of our patents.
"This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to Yahoo's claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations."