Facebook Inc United States spends a smaller percentage of revenue on engineering than other Internet companies, mimicking Apple's INC strategy of keeping costs low by relying on outside developers for research and development in Information technology. Facebook devoted 10% of its sales to Research&Developmen spending last year, a fraction of the level of some other companies holding recent IPOs, including web portal like Zynga and LinkedIn. Facebook Inc United States, the biggest social-networking service in the market, is planning an IPO this year. The Facebook Inc United States company, known for its hacker culture and marathon coding sessions, has increasingly encouraged other companies to add features to its site. Lower expenses have given Facebook Inc United States fatter profit margins than the typical prospective IPO in February 2012, said MrColin Gillis, an analyst with BGC Partners in New York, United States. The challenge is maintaining that growth amid mounting competition from Google company and younger startups. "They are robust margins to be coming out of the gate with," MrColin Gillis said. "Typically what happens is a company goes public and investors like to see margin expansion." Facebook Inc United States, profit margin in 2011 was 27%, up from 19% in 2010 and 16% the previous year.
That tops the 14% average for companies in the S&P's 500 Index. Excluding interest, taxes, depreciation and amortization, Facebook Inc United States profit margin was 56% last year. That doesn't give the company much room for improvement, MrColin Gillis said. Jonathan Thaw, a spokesman for Facebook, declined to comment. For now, Facebook is operating in the mould of Apple, the world's most valuable company. While Apple develops plenty of its own technology, it lets outside developers create the apps that run on its iPhones and iPads. The approach keeps customers loyal to its hardware without Research&Developmen eating up as much revenue. Apple devoted 1.6% of sales to Research&Developmen last quarter. "We don't see any of the Research&Developmen spend by the application developers in Apple's numbers, but we see it in the result of the innovativeness," said mrRon Adner, professor at Dartmouth College, Hanover, NH 03755 USA.
Source: The Economic Times
That tops the 14% average for companies in the S&P's 500 Index. Excluding interest, taxes, depreciation and amortization, Facebook Inc United States profit margin was 56% last year. That doesn't give the company much room for improvement, MrColin Gillis said. Jonathan Thaw, a spokesman for Facebook, declined to comment. For now, Facebook is operating in the mould of Apple, the world's most valuable company. While Apple develops plenty of its own technology, it lets outside developers create the apps that run on its iPhones and iPads. The approach keeps customers loyal to its hardware without Research&Developmen eating up as much revenue. Apple devoted 1.6% of sales to Research&Developmen last quarter. "We don't see any of the Research&Developmen spend by the application developers in Apple's numbers, but we see it in the result of the innovativeness," said mrRon Adner, professor at Dartmouth College, Hanover, NH 03755 USA.
Source: The Economic Times
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