Gov Brown Call Your Office — Facebook is in the Tank

Russ Steele

Right after the Facebook IPO I blogged using a title similar to the above on my post and was told by his Purpleness that I just did not understand. Now the Legislative Analyst’s Office sees the same pitfall that I did with Facebook sliding into the tank. Gov Brown had assumed that the IPO would produce millions of tax revenue for his budget. Does not look like that will happen.

The Sac Bee has the story HERE.

The state’s Legislative Analyst’s Office said Wednesday that “hundreds of millions” of dollars in assumed tax revenues may never materialize due to the continued slide in Facebook’s stock price.

ooo

The Analyst’s Office said today that much of the Facebook income tax revenues will still come in. But the LAO added that “if the company’s stock price remains depressed, hundreds of millions of income tax dollars assumed in the 2012-13 state budget plan are at risk.”

The stock is down below $20 today and three top executive were fired today, after admitting that Facebook has 83 million fake accounts.

I just could not see how Facebook was going to make any money, especially with more people abandoning their desk top and lap tops for smartphones. A study by the World Bank and infoDev titled “Information and Communications for Development 2012” found that an estimated three-quarters of the world’s people have access to a mobile device. The number of worldwide mobile subscriptions grew from less than 1 billion in 2000 to over 6 billion today, the study said. Globally about 30% of all those phones are smartphones. In the US 46% of all cellphones are smartphones.

With more and more Facebook users relying on smartphones there is not enough ad space on the screen without annoying the user.  Facebook revealed it had 955 million monthly active users and 543 million monthly active mobile users. In the social-networking giant’s 10-Q filing published last night, the company disclosed that nearly 20 percent of the latter number, 102 million users, accessed the social network in June solely from their mobile device. More at CNET.com

The use of smartphones as the prime computing device is projected to grow.  As it grows, Facebook’s revenue problems become more tenable. It appears investors are coming to the same conclusion.  Wonder what his Purpleness’ thinks?

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

2 Responses to Gov Brown Call Your Office — Facebook is in the Tank

  1. Market Watch:

    With Facebook shares trading at  all-time lows, investors in the busted IPO are gnashing their teeth.

    But they’re not the only ones.

    California state officials had been counting on a big boost to state revenues from the social networking company FB +0.60% .

    California Governor Jerry Brown’s office put the number as high as $1.9 billion, assuming that Facebook shares are trading around $35 later this year when restricted stock unit lockups end.

    Now however, with Facebook barely above $20, those assumptions are very much in doubt.

  2. Arthur M. Day. says:

    Newsbusted’s Jody Miller: ‘Facebook has unfriended itself.”

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