Facebook, the world’s largest social network, is planning acquisitions that will improve site design, keep its service reliable and advance mobile features to stave off competition from Google and Twitter.The company aims to make about 20 purchases in 2011, up from 10 last year and one in 2009, Vaughan Smith, Facebook’s director of corporate development, said in an interview.
Facebook is betting that a focus on design will entice people to spend more time on the site, while adding mobile services can cater to the growing number of members using handheld devices. As it grapples with competition from Google and Twitter, Facebook also must bolster its system so the site runs smoothly amid rapid growth. The company has made 13 acquisitions so far this year, including adding a mobile group- messaging service it rolled out to users this month.
“Two years ago we didn’t have a track record in acquisitions,” Smith said. “While we expected them to work well, it was still a crapshoot how they’d turn out. We’ve built a culture that supports entrepreneurs, and it’s working incredibly well.”
Facebook makes money from advertising and by taking a commission when software developers sell virtual goods on the site. As a closely held company, Facebook doesn’t disclose financials. A person with knowledge of the matter said in May that the company is likely to generate more than $2 billion in earnings before interest, taxes, depreciation and amortization this year.
In addition, Facebook has raised more than $2 billion from investors, including $1.5 billion from an investment led by Goldman Sachs Group, announced in January.
Facebook has been sharpening its focus on mobile, which is how more than a third of users access the site. In February, the company acquired Beluga, a startup that helped users send messages to groups of people through their mobile phones. Facebook earlier this month introduced its own application — based on Beluga’s technology — that handles messaging on Apple’s iPhone and phones based on Google’s Android software.
By contrast, Google has $39.1 billion in cash. Google, the biggest Internet search engine, unveiled a new social-networking service, called Google+, in June. It already had attracted 29 million people by the end of July.
Facebook, based in Pala Alto, California, has made mostly small acquisitions, with target companies sometimes having one or two employees. The company has a market value of $72.5 billion that’s more than the valuations of publicly traded internet companies such as EBay Inc. and Yahoo!
The average US Facebook user spends more than seven hours a month on the service, according to ComScore. With the jump in users — to more than 750 million from 500 million in July 2010 — as well as exponential growth in applications and products, the company is working to manage rising complexity in its vast computer systems. To help, the company opened a new data center in Prineville, Oregon, earlier this year.
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