Aug. 9 - Facebook shares have lost nearly half of their IPO value and Mark Zuckerberg needs to restore confidence in the stock and the vision of the world's biggest social network. Here are three ways Facebook can patch things up with its ''friends''. Conway G. Gittens reports.
It's been an unfriendly environment for Facebook shareholders. But equity analysts and academics say the world's biggest social network can patch things up in at least three ways: No. 1 - Give users a reason to keep liking Facebook at home and on the go. Boston University Professor James Post: SOUNDBITE: JAMES POST, PROFESSOR, BOSTON UNIVERSITY (ENGLISH) SAYING: "I would say in many respects many of customers really don't know what they want until it is put in front of them and then they respond positively. The key to Facebook's continued growth is to continue to have strong technology opportunities, good apps." Facebook is already trying. Sponsored stories, seen as more mobile friendly and less intrusive, are new but already generating $1 million a day in revenue, according to the company. And there's more: so-called log out ads, says Arvind Bhatia of Sterne Agee: SOUNDBITE: ARVIND BHATIA, SENIOR RESEARCH ANALYST, STERNE AGEE (ENGLISH) SAYING: "So when you log out of your FB page you see a big ad for a company, Microsoft might advertise there. There are 34 million people that apparently log out on FB on a daily basis, so that's a captive audience." And tests will begin on a service that directs smartphone users directly to an app store by clicking on sponsored stories, timelines, and other postings. Which is fix No. 2: Fix mobile and advertisers will stay Facebook's BFF. SOUNDBITE: JAMES POST, PROFESSOR, BOSTON UNIVERSITY (ENGLISH) SAYING: "They have an outreach on any given day to a one billion potential customers in the world; one billion members, that is an extraordinary number. Even if they reach a small percentage of that, that is still a tens of millions of people who are willing to pay something to connect and rely on Facebook." And that leads to fix No. 3: Give investors a reason to like Facebook again. SOUNDBITE: ARVIND BHATIA, SENIOR RESEARCH ANALYST, STERNE AGEE (ENGLISH) SAYING: "They are trying to capture a piece of what is a very large market, the $600 billion advertising market. $65- $70 billion of that is online and Facebook is playing in both and they have to essentially convince investors and advertisers that Facebook is a solution; that because they have the eyeballs ultimately they will be able to generate revenue." STAND-UP: CONWAY G. GITTENS, REUTERS REPORTER "But much faster revenue growth was baked into the over-hyped IPO. So analysts warn investors: this friendship has to be long-term to yield results." One fix not needed experts say: Zuckerberg should stay. Conway Gittens, Reuters