Facebook responds through VentureBeat to TechCrunch’s suggestion that Facebook has a growing cash problem that just sent CFO Gideon Yu scurrying to investors of last resort Dubai in search of more money.
Here’s the official statement given to VentureBeat:
As a matter of policy, we don’t comment on market speculation or rumour about our finances. Facebook is well-positioned both financially and within the market and any thoughtful attempt to model our business should reflect that. Our advertising business has great depth and breadth. While no ad business can ever be 100% recession proof, the breadth of our advertiser base and the innovative products we offer bolster our position in the current cycle. We’ve also been closely managing the business so we can continue to hire great people and scale. While we’ve achieved certain milestones, we are deeply committed to even greater business success in the future.
A source close to Facebook implies to VentureBeat that TechCrunch’s analysis missed all sorts of revenue streams like virtual gifts and that Facebook’s revenue this year will be close to the expected $300 million. Then the source close to Facebook turns his/her attention to costs:
OK, but what about growth-fuelled costs for servers and such? Both sources I’ve spoken to suspect those numbers are being overstated. The source close to the company says that both revenue and cost metrics are pointed in the right direction, and that it neither faces a deadly burn rate nor lacks access to cash.
What if Facebook wants to raise more money? At what valuation, in that case? Trying to calculate what Facebook is actually worth at this point is, as usual, a Silicon Valley parlor game. Our other source puts it this way:
And THEN…one of VentureBeat’s sources (intentionally or not) starts conditioning everyone to expect a down round (a new financing at a lower valuation than the street-mugging Facebook gave to Microsoft last year). So get ready for a down round:
People always forgot that a valuation is based 50 per cent on the market (beta) and 50 per cent the specific company. Google’s valuation has declined by 40 per cent (as have all other major Internet companies) — even if FB were worth $15 billion last year and executing flawlessly, their valuation would be reset by the market.
At about, say, $5 billion? That’s about where we might put it, if revenue really will be $300 million this year (less than expected at the time of the Microsoft deal, before the Beacon flop) and the bottom line doesn’t look too bad.
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