Facebook: “We need more money”

When you consider going in debt, you know a car, a house, or private island are all worthwhile things to actually go in debt for as they can help you later on down the line.  Rarely if ever is it a good choice to go deeply in to debt for an electronic…such as a computer.  (I know, I’m preaching to the wrong crowd here).  For example, if you make $1k/month and are living on your own with all sorts of bills, buying a $15k Mac Pro is probably not at the top of your smarts list.  Well, that is exactly what Facebook is  trying to do…more or less.  The ever increasing growth that they have continued to experience is making them recalculate if their servers can handle the load.  That uncertainty is sending them to the bank looking for money.

Facebook has made public with their ideas of trying to secure as much as $100 million in financing.  Taking on larger sums of debt for equipment related purposes isn’t the most popular thing to do in silicon valley…however not compeltely “out there” if you know what I mean.   It certainly is the road less travled in the tech world.  This isn’t their first request for such a large sum of money as they made the same request last year also to the tune of $100 million.  So $200 million in two years.  (Look out…I’m on fire tonight!).  For a company that only makes $400 million a year, that is a big chunk of revenue.  Sure your stock options are worth somewhere around $3 billion.  But still, half of your revenue?  Do you think this is a smart idea?

I know in order to keep growth going you need to keep users happy and everything flowing nice and smoothly.  But what if this growth they are expecting in the near future tanks? What if their predictions are greatly exaggerated?  All of the money they spent on new equipment will certainly make the site hum along quite nicely, however there won’t be an equal rise in revenue which could mean a long time with those spent dollar bills stacked up to their eye balls.  Eh, but who am I to worry?  They managed to pull off the loan last year (which they only ended up using around $60 million of) and are sitting pretty nicely right now if you ask me.  Can Facebook continue their impressive growth that they have enjoyed the last year?  Or, will the economy claim yet another silicon valley victim?  Shout out your most inner thoughts below.

Source: Alley Insider, Business Week

Author: Mike Norris

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Gadget lover, smartphone collector, and beer connoisseur. I've been writing about gadgets for three years now and loving every minute of it. Outside of the digital landscape, I enjoy being active outdoors. I'm always up for a good conversation, so feel free to drop me a line!