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Financial Times Deutschland, Germany

Will Goldman Sachs Bring the Downfall of Facebook?

 

"Facebook will have to pull off the balancing act of becoming a conglomerate while remaining innovative. Many other market leaders have failed to do this. Admittedly, at the moment it's hard to imagine what new idea might bring about the social network's downfall. ·But neither did anyone at Yahoo or AOL."

 

EDITORIAL

 

Translated By Ulf Behncke

 

January 3, 2010

 

Germany - Financial Times Deutschland - Original Article (German)

The unpretentious founder of Facebook, Mark Zuckerberg: Is he making a deal with the devil by allowing Goldman Sachs to buy in?

 

BBC NEWS VIDEO: Why Facebook is worth $50 billion to Goldman Sachs, Jan. 4, 00:04:14RealVideo

Slowly but surely, its growth is getting scary: only six months ago, Facebook was valued at about $26 billion. And now, with Goldman Sachs coming on board, the social network's value has doubled.

 

It sounds like the emergence of a giant Facebook bubble. This suspicion is only partly justified. Certainly, compared to the revenue of about $2 billion, this record valuation is exaggerated. Besides, the number of users simply cannot continue to rise at the same rate.

 

However, unlike many promising but failed companies that were caught up in the 2000 dot-com bubble, Facebook has a working business model and makes a profit - through advertising and revenues from network games. All the while, the site now attracts more people than Google. A search engine's aim is to speedily send its users to other sites. The social network, however, was designed for users to linger. And along the way, user profiles are being built that are far more accurate, and thus more lucrative, than Google's.

 

For the time being, this will only pay off for Goldman Sachs investors. The U.S. Bank offers investors an opportunity to buy into Facebook, without Facebook having to disclose its financial data - and for that, Goldman will collect a handsome commission.  

 

In addition, Goldman Sachs can one day expect to launch the company on the stock market - and the higher its market value, the higher the fee.??

Posted by WORLDMEETS.US

 

If, however, Facebook is to realize $50 billion or more, it must provide buyers a sound strategy about how the company will achieve current investor fantasies. For instance, the company will have to provide an answer to how it plans to conquer the huge and still largely-untapped markets of Russia and China. Only such large countries offer the potential to allow the number of users to continue to grow exponentially.

 

Above all, Facebook will have to pull off the balancing act of becoming a conglomerate while remaining innovative. Many other market leaders have failed to do this. Admittedly, at the moment it's hard to imagine what new idea might bring about the social network's downfall.

 

But neither did anyone at Yahoo or AOL.

 

CLICK HERE FOR GERMAN VERSION

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[Posted by WORLDMEETS.US January 7, 9:57pm]

 








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