LONDON: It is true to say the best defense is a good offense. This certainly holds true for Facebook. The acquisitions of Whatsapp and Instagram were bold offensive moves meant to disrupt Google and establish Facebook as the most dominant platform in the mobile app ecosystem. The decision to embrace a constellation strategy and make Messenger a standalone app also contributed to Facebook’s offensive stance. Good offense has afforded Facebook a strong defensive strategy against competitors for the future of social in a mobile-centric world.
Shareholders are taking notice, as Facebook’s stock sentiment is very favorable. Facebook’s shares are up 5 percent since the company reported 2014 Q4 earnings and 31 percent in the past 12 months. Analysts predict record revenue of $3.56 billion, up 42 percent from the year-ago quarter and EPS of $0.40, up 18 percent from the year-ago quarter.
What should further please shareholders is that Facebook isn’t letting up. Facebook understands that revenue and profit diversification are essential in a software-first world. Google is currently challenged by their dependence on desktop search and plagued by their inability turn its portfolio’s stars, specifically YouTube and Android, into profitable monopolies. On the other hand, Facebook has three moats and is taking serious action (which we’ll discuss shortly) to evolve them into the stars of its portfolio. The revenue generating potential of these initiatives is also promising.
