Coursework Header Sheet
219509-15
Course
BUSI1271: Global Strategy: Analysis & Pr
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B/PG
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Individual report
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VJ Torlo
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04/12/2014
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whole or part, been presented elsewhere for assessment. Where material has been used from other
sources it has been properly acknowledged in accordance with the University's Regulations regarding
Cheating and Plagiarism.
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Contents
Coursework Header Sheet ..................................................................................................... 0
1.0 Introduction....................................................................................................................... 3
2.0 External analysis .............................................................................................................. 3
2.1 PESTEL ........................................................................................................................ 3
2.2 Five forces of competition ............................................................................................. 5
2.3 Partial SWOT – Opportunities and Threats ................................................................... 6
3.0 Internal analysis................................................................................................................ 7
3.1 Value chain ................................................................................................................... 7
3.2 Capabilities and resources ............................................................................................ 7
3.3 VRIO Framework .......................................................................................................... 8
3.4 Partial SWOT – Strengths and Weaknesses ................................................................. 9
4.0 Facebooks corporate strategy .........................................................................................10
4.1 The scope of activities ..................................................................................................10
4.2 Facebooks generic strategy .............................................................................................10
4.3 Facebooks main issues ...................................................................................................11
5.0 Strategic options ..............................................................................................................11
5.2 Strategic selection ...........................................................................................................13
5.3 Implementation ................................................................................................................13
6.0 Conclusion.......................................................................................................................16
Appendix A: References ........................................................................................................17
Appendix B: BCG Matrix ........................................................................................................21
Appendix C: Financial health .................................................................................................22
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2014
Strategic analysis of
Facebook
WHICH STRATEGIC OPTION SHOULD FACEBOOK GO FOR?
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UNIVERSITY OF GREENWICH
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1.0 Introduction
The purpose of this assignment is to create a strategic analysis for Facebook. The social network
was essentially only for Harvard Students, today the site is open for everyone and translated into
over 70 languages. Facebooks mission is to give users the power to share and make the world
more open and connected. Mark Zuckerberg and Facebook's employees own more than half of
the shares according Statista (2013). Mark Zuckerberg's forms roommate, Dustin Moskovitz
owns several percentages, and Chief Operating Officer for Facebook, Sheryl Sandberg owns
more than 1%.
2.0 External analysis
2.1 PESTEL
This analysis is the best solution for doing a strategic analysis to describe the main opportunities
and threats according Eliza Bivolaru, Robert Andrei & George Purcaroui (2009). We will now
consider the various macro environmental factors that Facebook need to consider.
Political
-
Many governments and users, have
expressed their concerns that Facebook
covers so much user information
The German data protection commissioner,
Thilo Weichert, warned Facebook shareholders
in an article by Yahoo (2012, para. 3), that
Facebook “is based on practises that breach
European privacy rules”. Thilo Weichert got
quoted that “Facebook could be ordered to stop
transferring user information to the United
States.”
3
Economic
-
Revenues are not growing as before.
How Facebook is going to move forward
in this business cycle, is something that
the shareholders worry about.
(Puneet Sikka, 2014)
4Q2014 is expected to have an even lower
growth rate of 40 % to 47 %. A year earlier
the growth rate was 76 %.
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Social
-
Puneet Sikka (2014) writes about the
future growth in mobile payment
transactions, $1.6 billion in 2013, to $118
billion in 2018.
-
Facebook teamed up with Stripe, a
company which enables businesses, to
accept and manage online payments much
more easily. This future market potential,
seems like a new social trend that
Facebook is probably going to benefit
from.
Technological
-
Environmental
-
4
It is still hard for companies to buy
clean energy in many regions. To make
that easier, Facebook have been
collaborating with a number of other
companies to share the best practices, and
make buying clean energy, as easy and as
cost-effective, as possible. This
opportunity will help Facebook reduce and
stabilize the energy costs, create jobs in
the communities, and combat climate
change.
Mark Zuckerberg created Internet.org
(2014, para 1), this is a global partnership
between local communities, non-profits,
technology leaders, and experts “who
working together to bring the Internet to
the two thirds of the world's
population that does not have it.” This
is a major barrier that Facebook wants to
create an opportunity out of.
Legal
-
Jessi Hempel (2012) writes that the
Chinese government has blocked the
citizens' access to Facebook since 2009.
There are roughly 513 million who have
access to the internet here. Liu Miao
(2012) writes that the government want
to control everything on the internet, and
if they think something is inappropriate,
the content will be removed. This legal
factor is at the same time a threat, and an
opportunity for Facebook.
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2.2 Five forces of competition
Michael Porter (1979) writes about five forces of competition in a Harvard Business Review, and
if we place Facebook in its context, we can analyse the characteristics of Facebook and other
social networks from the internet.
Figure 1
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There is a high threat of new entrants in figure 1, many of the innovators are motivated by how
quickly founders of new tech start-up companies, became millionaires. Social networks have a
lack of monetizing their business models, and the industry is a highly competitive one.
2.3 Partial SWOT – Opportunities and Threats
Susan Jackson, Aparna Joshi and Niclas Erhardt (2003) identifies in an academic journal,
external factors that can help us to draw out the opportunities and threats in figure 2:
Figure 2
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3.0 Internal analysis
After having analysed Facebooks environment, we can move on to the internal analysis.
3.1 Value chain
Jeffrey Rayport and John Sviokla (1995) writes about how a company creates value in a Harvard
Business Review, and this is relating to Facebook, since executives need to pay attention how
value is being created both in the virtual and physical world. The value chain to Facebook are
activities that make Facebook deliver a more valuable product to the market. Facebook users
who have been users for a long time, have experienced interface changes, and several new layout
changes every year. For instance video calls and the introduction of Timeline. Other examples of
new features are third-party applications for games, status updates, "like" buttons, mobile
integration and marketplace. These additional features make Facebook more fun to use. In
addition, developers’ like Zynga, is adding value to Facebook by providing games to Facebook.
3.2 Capabilities and resources
We need to identify the capabilities and resources developed by Facebook:
Figure 3
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David Collis (1994) writes in an academic journal that organisation capabilities are vulnerable to
threats of change, but a bigger threat may be higher-order thinking, doing something with the
facts that we already now. Therefore, he suggest that there can be an infinite regress, of the
prediction of a sustainable competitive advantage. So when Facebook is seeking new solutions to
new problems, it is essential that Facebook is arguing for the value of distinctive competences in
figure 3, because every employee need to know how to write code, and therefore becomes
capabilities context dependent.
3.3 VRIO Framework
In order to continue, we can ask four questions to the resources and capabilities for Facebook:
Figure 4
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All colleagues share an approach that something can always be improved and that nothing is
complete. Richard Hall (1992) writes about how valuable intangible resources can be in an
academic journal and this is truly one for Facebook. Facebook employees have to continuously
innovate, in order to improve Facebook. Many key features like chat, timeline etc. have been
created by this culture. In figure 4, this culture is really contributing towards Facebooks
sustainable competitive advantage.
3.4 Partial SWOT – Strengths and Weaknesses
Now we will be able to identify strengths and weaknesses:
Figure 5
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4.0 Facebooks corporate strategy
4.1 The scope of activities
Kenneth Andrews (1997) writes that a company’s corporate strategy will define where the
business competes, and a company should focus on to convert its distinctive competences to
competitive advantages. The basic coding program, is a distinctive competence for Facebook,
and Facebook has vertically integrated many features that never leaves the Facebook platform.
For instance, if a Facebook user create a status update, this status update never leaves the
platform. It is not possible to receive this update by email, since it not horizontal integrated. But
a further step up in the value chain, Facebook offers a wide range of applications that allows user
to horizontally communicate across platforms. For example, a newspaper could have its own
Facebook page that publish a news story, and this news story could also be published in the
paper edition. Another scope of activity, can we read from the Developers page on Facebook
(2014), today the social network supports more than 70 languages. Making the firm exposed to a
wide broad of potential new users internationally.
4.2 Facebooks generic strategy
4.2.1 Focused differentiation
Facebooks belief is that users will get a better user experience if Facebook focuses entirely on
the needs of the users. Facebook is constantly adding new features to their site every year. That’s
why Facebook is enjoying more customer loyalty than other social networks. The focused
differentiation strategy is attractive for Facebook according Arthur Thompson et al. (2013), since
Facebook has access to large amounts of user data, and the user base is big enough to be
profitable. Facebook have a unique company culture with a reputation of innovation and quality.
The competitive position for Facebook is strong at the moment, but is threatened since Google+
is very similar to Facebook. In addition, changes in customer taste is also a risk for future
growth.
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4.3 Facebooks main issues
In figure 6, the main issues are summarised:
Figure 6
All issues are relevant in figure 6, except for that very few users care about that their user
information gets used for advertisement.
5.0 Strategic options
5.1 TOWS Matrix
After the external and internal analysis, we will use the TOWS Matrix in figure 7 as explained in
a journal by Robert Dyson (2004), to connect internal and external factors. This will help us to
identify available options for further growth:
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Figure 7
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5.2 Strategic selection
5.2.1 The SFA Framework
Johnson, Scholes & Whittington (1998) suggest three different criteria’s for implementation.
Having identified available options in figure 7, we will need to evaluate which one that is best
suitable.
Criteria
Internet to the
Mobile
Prevent ad-
More
third world
payment
blocking
aggressive ads
transactions
Suitability
3
4
2
2
Feasibility
2
5
4
4
Acceptability
1
3
3
4
Total score
6
12
9
10
Figure 8
Based on specific environments, the capabilities and expectations from shareholders,
implementing mobile payment transactions got the highest score.
5.3 Implementation
From the SFA Framework, mobile payment transactions between users got the highest scores. In
the implementation part, we could evaluate capabilities and resources for all four options:
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5.3.1 International expansion
In the article to Time, written by Victor Luckerson (2014), he points out that revenue generated
per Facebook user, is lower in India, Africa and Middle East. Nicola Mendelsohn, the vice
president of Facebook for Europe, responds that the advantage, is that this is the first time
companies are talking to them through advertising. According Internet.org (no year), there is a
separate lab working for Facebook to develop affordable internet access around the world, and
they explore new technology which involves satellites and use of lasers. With the resources and
capabilities available for Facebook today, this is a difficult option since the technology do not
exists.
5.3.2 Ad blocking software
Facebook is trying to monetize their business model, but so far their ads have been small, and
many users use extensions that can block all advertising on Facebook. The most popular
extension is downloaded over 200 million times according Laura Stampler (2013). Laura
Stampler (2013) writes that Adblock is available to both PC and mobile, and estimates shows
that the program is downloaded between 50,000 times to 100,000 times daily. A German firm,
who owns this extension, has a simple business model. In return for a fee, they do not block
advertising from any company that pays.
According Laura Stampler (2013), PageFair is a company that measures how much companies
lose out on the ads that are being blocked. PageFair concluded that Google lost $ 887 million in
2012 due to Adblock. Alex Hern (2013) writes in an article to The Guardian that Adblock is so
powerful, that Google has been forced to make a deal with Adblock because of these major lost
revenues. Some of the companies that pay today are mentioned in the articles by Business Insider
and The Guardian; Twitter, Amazon, Google, and Russia's largest search engine, Yandex. The
amount they pay to avoid blocked ads, is cash equal to 30% of the revenue from ads.
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Adblock is growing dramatically, while options to place ads on sites do not. If Facebook
increases their size of the ads and place the ads to become more visible to users, probably even
more people would download the Adblock software. Facebook should therefore evaluate, if they
want to lose 30% of the revenue from ads. In 2013, Facebook had 6% market share in digital
advertising versus Googles 32% market share (LA Times, 2014). For the moment, it is unlikely
that the shareholders want to lose 30 % of their revenue, and this risk return outcome, would not
be much appreciated from the shareholders.
5.3.3 More aggressive ads
Wolfgang (2014) has calculated on a basis of 3 million Facebook impressions, a ratio of 51 times
more likely for a click with an ad in the middle of the newsfeed. Advertising revenue from nonmobile has been relatively flat since advertising on mobile phones took off. It could be that the
ads on the right side have been so defensively that users almost do not notice it. But if Facebook
decides to become more aggressive, the question is, if this strategic option would work in
practice. Facebook users could just download the Ad-blocking software.
5.3.4 Mobile payment transactions
The Irish Times reported in an article by Tom Lyon (2014) in September, that Facebook had
teamed up with Stripe, a company which enables businesses, to accept and manage online
payments more easily. With this technology Facebook users could transfer money to each other
in a safe manner. This strategic options fits with Facebooks position, because 1.35 billion users
could easily registered their debit cards and transfer money to friends for a very low fee, or spend
money on other services at Facebook. They should be able to implement this with the cash
available in appendix C without any significant problems.
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6.0 Conclusion
Having identified Facebook internally and externally, we then identified available options for
growth. Considering resources and capabilities, the best strategic option was mobile payment
transactions. Many other substitutes for Facebook will probably launch similar services, but none
of the competitors are near as the same user base as Facebook. Thus, it is important that
Facebook has a strategy of continuous innovation to maintain its user base. Implement mobile
payment transactions is valuable for Facebooks further growth, but is also a new feature that
provides a greater value for the users of Facebook.
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Appendix A: References
Aoaeh, B. (2012). Business Model Risk Analysis – A Short Case Study Of Facebook And
Zynga. Available:http://tekedia.com/38971/business-model-risk-analysis-short-case-studyfacebook-zynga/. Last accessed 17th Nov 2014.
BBC. (2014). Facebook and Zynga to end close relationship. Available:
http://www.bbc.co.uk/news/technology-20554441. Last accessed 17th Nov 2014.
BBC. (2013). Facebook use 'makes people feel worse about themselves'. Available:
http://www.bbc.co.uk/news/technology-23709009. Last accessed 27th Nov 2014.
Bivolaru, E., Andrei, R. & Purcaroiu. (2009). BRANDING ROMANIA. A PESTEL FRAMEWORK
BASED ON A COMPARATIVE ANALYSIS OF TWO COUNTRY BRAND INDEXES. Vol. 4 (4),
p101-112.
Collis, D. (1994). Research Note. How Valuable are Organizational Capabilities?. Vol. 15 (1),
p 143-152.
comScore. (2014). comScore Releases August 2014 U.S. Search Engine Rankings.
Available: http://www.comscore.com/Insights/Market-Rankings/comScore-ReleasesAugust-2014-US-Search-Engine-Rankings. Last accessed 18th Nov 2014.
Dyson, R. (2004). Strategic development and SWOT analysis at the University of
Warwick. European Journal of Operational Research. Vol. 152 (3), p631-640.
Eisenmann, T., Parker, G. & Van Alstyne, M. (2006). Strategies for two-sided markets.
Harvard Business Review, 10, p92-101
Epicenter staff. (2012). Mark Zuckerberg’s Letter to Investors: ‘The Hacker Way’. Available:
http://www.wired.com/2012/02/zuck-letter/. Last accessed 17th Nov 2014.
Facebook. (2014). Localization & Translation. Available:
https://developers.facebook.com/docs/internationalization/. Last accessed 29th Nov 2014.
Green on Facebook. (2014). Available: https://www.facebook.com/green. Last accessed
11th Nov 2014.
Gurufocus. (2014). Facebook Inc. Available: http://www.gurufocus.com/stock/FB. Last
accessed 18th Nov 2014.
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Gurufocus. (2014). Facebook Inc. Available:http://www.gurufocus.com/financials/FB. Last
accessed 18th Nov 2014.
Hall, R. (1992).The strategic analysis of intangible resources. . Vol. 13 (2), p135-144.
Hempel, J. (2012). Facebook's China Problem. 166 (5).
Hern, A. (2013). Adblock Plus: the tiny plugin threatening the internet's business model.
Available: http://www.theguardian.com/technology/2013/oct/14/the-tiny-germancompany-threatening-the-internets-business-model. Last accessed 19th Nov 2014.
Internet.org. (2014). Who we are. Available: https://internet.org/about. Last accessed 19th
Nov 2014.
Jackson, S., Joshi, A., & Erhardt, N. (2003). Recent Research on Team and Organizational
Diversity. SWOT Analysis and Implications. Vol. 29 (6), p801-830.
Johnson, G., Scholes, K., & Whittington, R. (1998). Exploring Corporate Strategy. (5), p365.
Jun, J. (2012). This is How Buffett Interprets Financial Statements. Available:
http://www.oldschoolvalue.com/blog/tutorial/this-is-how-buffett-interprets-financialstatements/. Last accessed 19th Nov.
Kunz, B. (2013). Facebook Ads Are Killing It. But Why?. Available:
http://digiday.com/platforms/facebook-ads-are-killing-it-but-why/. Last accessed 18th Nov
2014.
LA times. (2014). Facebook ad revenue grows 64%. Available:
http://www.latimes.com/business/la-fi-facebook-earnings-20141028-story.html. Last
accessed 18th Nov 2014.
Luckerson, V. (2014). Meet the Woman Heading Facebook's Huge International Growth.
(1p), p1-1.
Lyons, T. (2014). E-payments company Stripe to power Facebook’s ‘Buy’ button. Available:
http://www.irishtimes.com/business/sectors/technology/e-payments-company-stripe-topower-facebook-s-buy-button-1.1944710. Last accessed 28th Nov 2014.
Marshall, G. (2013). Skype turns 10: did Microsoft's bet pay off?.Available:
http://www.techradar.com/news/internet/voip/skype-turns-10-did-microsoft-s-bet-pay-off-1176537. Last accessed 14th Nov 2014.
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Miao, L. (2012). Why is Facebook blocked in China?. Available:
http://www.quora.com/Why-is-Facebook-blocked-in-China. Last accessed 11th Nov 2014.
Net MBA. (no year). The BCG Growth-Share Matrix. Available:
http://www.netmba.com/strategy/matrix/bcg/. Last accessed 18th Nov 2014.
Porter, M. E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.
Porter E. M. (1979). How competitive forces shape strategy. . 1 (1), p 137-145.
Quick MBA. (no year). Porters Generic Strategies. Available:
http://www.quickmba.com/strategy/generic.shtml. Last accessed 18th Nov 2014.
Rayport, J. & Sviokla, J. (1995). Exploiting the Virtual Value Chain. 1 (1), p75.
Rushton, K. (2014). Facebook now has as many users as China has people. Available:
http://www.telegraph.co.uk/technology/facebook/11194049/Facebook-profits-pass-1bn-asmore-users-log-on-every-day.html. Last accessed 13th Nov 2014.
Sikka, P. (2014). Why investors punished Facebook’s stock despite strong growth.
Available: http://marketrealist.com/2014/11/investors-punished-facebooks-stock-despitestrong-growth/. Last accessed 11th Nov 2014.
Smith, D. (2014). All of Facebook’s Revenue Growth Is Coming From Mobile Ads. Available:
http://www.slate.com/blogs/business_insider/2014/10/28/facebook_revenue_growth_is_co
ming_from_mobile_ads.html. Last accessed 18th Nov 2014.
Stripe. (2014). Security. Available: https://stripe.com/help/security. Last accessed 19th
Nov 2014
Stampler, L. (2013). Google Saved An Estimated $887 Million By Paying Adblock Plus To
Show Its Ads Read more: http://www.businessinsider.com/google-saved-an-estimated-887million-by-paying-adblock-plus-to-show-its-ads-20. Available:
http://www.businessinsider.com/google-saved-an-estimated-887-million-by-payingadblock-plus-to-show-its-ads-2013-8?IR=T. Last accessed 19th Nov 2014.
Statisa. (2013). Major Facebook stakeholders as of January 2013, by ownership
stake. Available: http://www.statista.com/statistics/273562/major-facebook-stakeholdersby-ownership-stake/. Last accessed 27th Nov 2014.
The Small Business Authority. (2013). So What “Really” Happened To and What’s
Happening With MySpace?. Available: http://www.thesba.com/2013/05/17/so-what-reallyhappened-to-and-whats-happening-with-myspace/. Last accessed 17th Nov 2014.
Thompson, A., Janes, A., Peteraf, M., Sutton, C., Gamble, J., Strickland, A. (2013). Crafting
and Executing Strategy: The Quest for Competitive Advantage: European Edition. Berkshire:
McGraw-Hill Education.
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Wolfgang. (2014). Facebook Ad CTR Study– Newsfeed v Display: From The Wolfgang Lab.
Available: http://www.wolfgangdigital.com/blog/digital-marketing/facebook-ad-ctr-studynewsfeed-display-wolfgang-lab/. Last accessed 18th Nov 2014.
Yahoo. (2012). German privacy official warns Facebook investors. Available:
http://news.yahoo.com/german-privacy-official-warns-facebook-investors-140458273-finance.html. Last accessed 11th Nov 2014.
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Appendix B: BCG Matrix
Figure 9: Net MBA (no year)
“Under the growth-share matrix model, as an industry matures, and its growth rate declines, a
business unit will become either a cash cow or a dog, determined solely by whether it had
become the market leader during the period of high growth.” NetMBA (no year, para. 8)
It can be difficult to appeal this model for Facebook. Since Facebook acquired Whatsapp and
Instagram, they now own this technology, which can create valuable synergies for the Facebook,
but this value is not included in this model. Many "dogs" in the niche segment can also be
profitable, and Facebook has very few products that have low growth, they experience rather a
very high growth. It can also be argued for, if start-up companies that grew very rapidly, ever
went through a traditional decline cycle.
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Appendix C: Financial health
Profitability and competitive advantage
Facebook has grown into a company that is worth over $ 200 billion. Jae Jun (2012) writes in his
article about how one of the greatest investors of all time, Warren Buffett chooses company to
invests in. Warren Buffet is only investing in companies with are likely to having a competitive
advantage. One of his highlights are companies with a gross margin % over 40, and net margin
% over 20 are likely to profiting from a competitive advantage.
Here is Facebooks fundamentals compared to Googles:
Figure 10
Since Facebook has over 20% net margin in Figure 9, they are likely to benefiting from a
competitive advantage. Compared to their biggest competitor Google is Facebook marginally
better equipped to deal with tougher times than Google. Facebook announced that operating
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Expenses will grow significantly next year. In 2015, these expenses is expected grow from 50 to
70% compared to the expenses in 2014. Puneet Sikka (2014) writes this is because Facebook will
diversify its investments in Internet.org, Oculus, WhatsApp, Ad-Tech Initiative and Video.
Efficiency
Return on equity (ROE shortened)
This ratio measures the rate of return shareholders equity. The ratio measures how effective
Facebook is to generate profits from the total equity. You can use it to show how good Facebook
using their investments to generate growth.
Net income 3Q2014 = 806
Net income 806 * 4 = 3224
ROE = 3223 / (18346 total equity 2Q2014 + 21238 total equity 3Q2014) = 16.29 %
ROEs between 15% and 20% are considered desirable. Facebooks twelve trailing months ROE
% is currently 16.26% versus the industry median of 4.57% Gurufocus (2014). Facebooks ROE
is in the middle of the interval of 15% to 20% of what is preferable.
Return on assets (ROA shortened)
This ratio measures the rate of return on Facebooks total assets. The ratio measures how effective
Facebook is to create profits from equity and plus the total debt. This ratio can vary from
industry to industry, so it is wise to compare ratio to other companies in the same industry.
Net income 3Q2014 = 806
Net income 806 * 4 = 3224
ROA = 3224 / (20769 total assets 2014 + 24188 total assets 2013 / 2) = 14.34 %
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According Gurufocus (2014), the industry have a median of 2.76% versus Facebooks 14.34%.
This ratio shows that Facebook is way efficient than its competitors to generate revenue from its
total assets.
Valuation
Price/earnings is to FB is 75, that means that with today’s market cap as of 18th November 2014,
and the same yearly net income, it will takes 75 years before Facebook has earned its market cap.
The S&P 500 index have according multpl (2014), had a median price/earnings ratio of 14.57
since 1870.
P/E = Market cap as of 18th Nov $ 208.36 B / net income TTM 2.762 = 75.43
That means that investors have high expectations for Facebook's future growth. And when you
compare FB to SPX you can tell that FB is historically overvalued.
Financial strength
If Facebook can pay its debt by its cash, the Cash to debt ratio is bigger than 1. If it is smaller
than this, Facebook will have more debt than cash. If we calculate from Facebook's financial
report (Gurufocus 2014) is Facebooks cash to debt ratio:
Cash 14,250 / Total debt 278 = 51. This is very decent figures for Facebook to have.
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Cash flow from operations refers to the cash brought in through a company’s normal business
operations. It is the cash flow before any investment or financing activities. It is the cash version
of net income.
Year
2010
2011
2012
2013
Twelve
trailing
months
Mill $
698
1,549
1,612
4,222
5,105
You can see that cash from operations took off since 2012, this is probably since its revenue
from mobile ads took off at the same time.
Retained earnings is Warren Buffett's secret to finding a profitable company which is adding to
its net worth. Retained earnings is money that has not been paid out in dividends. Since this
amount of money has not been paid for dividend, the equity will increase by the same amount. If
Facebook is increasing its retained earnings will also its net worth increased according to Warren
Buffet. Below is Facebooks retained earnings according Gurufocus (2014):
Year
2010
2011
2012
2013
Twelve
trailing
months
Retained
earnings mill
$
606
1,606
1,659
3,159
5,398
Facebook has increased its retained earnings considerably in recent years. It makes Facebook
much better prepared to deal with adversity in less favourable economic periods.
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