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So, they're losing money on every customer but they'll make it up on volume?

• falsestprophet 19y ago
  Yes, they will make it up by increasing volume. They are spending the money on employees (to grow traffic) and servers (to accommodate traffic). They aren't spending it on hookers and private jets like Enron. The servers are one-time expenses. I don't know how Facebook is booking them because the company is private so I can't read its quarterly statement. But, if we could I bet they would be a special expense. They are buying the capacity to support their userbase. You simply don't need to do that every year. They are also spending a lot on engineers. I think they spent this money wisely. The Facebook application system generates a lot of free attention.
  • parker 19y ago
    Dude, servers aren't a one-time expense... in accounting it's called a capital expense, and it's depreciated. Most computer technology is depreciated over a course of two years, simply because of the assumption that that expense will re-occur in two years. Do you think Google's server farms have the same racked units that they put into place in 1998? That's crazy talk.
    • deleted 19y ago
      [deleted]
    • falsestprophet 19y ago
      Thanks for correcting me. My self-education in finance is incomplete. So, is it your opinion that Facebook is only reporting half of the cost of their servers when they talk about last year's annual loss? I still suspect that the numbers they throw around are a simple in-out calculation. But, in any event, a two year lifespan for a server is a little pessimistic.