Facebook CEO dangles search and mobile, shares rally

SAN FRANCISCO Tue Sep 11, 2012 7:33pm EDT

1 of 5. Facebook CEO Mark Zuckerberg speaks during a question and answer session at the TechCrunch Disrupt conference in San Francisco, California, September 11, 2012.

Credit: Reuters/Beck Diefenbach

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SAN FRANCISCO (Reuters) - Facebook Inc CEO Mark Zuckerberg soothed investors in his first major public appearance since the No. 1 social network's rocky May IPO, breathing life into its struggling shares after hinting at new growth areas from mobile to search.

The 28-year-old co-founder looked confident in a gray T-shirt and jeans, asking Wall Street to be patient as the company developed new products, addressing issues such as employee morale, and dashing rumors Facebook may build a smartphone.

The chief executive, who has himself lost billions of dollars on paper since Facebook's market debut, admitted to disappointment about his company's crumbling share price, but argued Wall Street has yet to grasp the full potential of its fledgling mobile business.

His delivery helped drive Facebook shares up more than 3 percent after hours to above $20, building on a 3.3 percent gain in regular trade on Tuesday.

While declining to offer details, Zuckerberg hinted that the company was "halfway through" a cycle to "retool" and offer new advertising products. He also said he believed search could be a ripe area of growth for Facebook and was working to offer a competitive search product -- comments that likely interested executives at Google Inc, one of Facebook's fiercest competitors.

"Facebook is uniquely positioned to answer a lot of questions people have," Zuckerberg told the TechCrunch Disrupt conference in San Francisco. "We have a team working on search."

Zuckerberg repeatedly emphasized that the company would focus on building Facebook's smartphone application, while conceding that he had erred years ago by using a programming language that slowed the development of Facebook apps for Apple and Android phones.

But he again quashed a years-long rumor that Facebook is wading into the hardware business and developing a branded phone.

Building a smartphone would be "clearly the wrong strategy for us," Zuckerberg said.

He conceded that the company's downward spiraling stock was not helping staff morale, but stressed he still thought it was a good time to join the company and "double down."

"It's not like this is the first up and down that we've ever had," he told hundreds of attendees at the conference. "I would rather be in the cycle where people underestimate us."

Facebook became the first U.S. company to debut on stock markets with a value of more than $100 billion. But it has since lost more than half of its capitalization as investors fret about slowing growth.

Shares in the company ended Tuesday at $19.43, well off their $38 debut price. The stock crept above $20 in extended trade on Tuesday.

(Reporting by Alexei Oreskovic and Gerry Shih; Editing by Leslie Gevirtz)

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Comments (4)
John2244 wrote:
Mark,
We all understand the value of Facebook – probably way better than you. Its a great company but your IPO price was plain stupid. Your a great designer but the article should say you have no clue how to do a valuation. Please leave the CEO role – you are embarrassing. I won’t invest a dime when someone like you can casually dismiss the millions that lost a fortune without taking any blame.

Sep 11, 2012 5:58pm EDT  --  Report as abuse
reality-again wrote:
Disappointed?
Time for Mark to start buying back some FB stock, isn’t it?
With such a huge potential he claims to see, today’s FB stock price must seem like a bargain to him.
Or not…

Sep 11, 2012 6:21pm EDT  --  Report as abuse
mbaboston wrote:
I would like to believe it were as simple as wall street not understanding the slow growth mobile business. Wall street is finicky and people do want their short term returns. However, it is hard to imagine that customer dissatisfaction with Facebook policies and advertising click scandals is unrelated.

Let’s look at the history of Facebook. I believe one of the biggest factors in Facebook’s growth was a level of trust users had with the site. MySpace gave us alternate Internet personas. A virtual world of nobodies. Facebook forced us to identify ourselves and prove an affiliation with a institution. I used my college alumni account to get my Facebook account and enjoyed the idea of connecting with real people. Then came the privacy issues and Mr Zuckerberg’s assertion that he new our needs better then ourselves. This created distrust that continues to slide. The latest in his endeavors is the timeline. Slowly we were “converted” as each of us cursed this change publicly.

I am not in the core demographic. I am in my 50s. I do not recover from distrust as quickly as my younger Facebookers. At this point in time I will not use a Facebook app or associate any third party sites with my Facebook account. I distrust Facebook more than any other site.

In my humble opinion, Zuckerberg has to lose his naive arrogance and win us back. Facebook is enduring, but we tend to be fickle.

Sep 11, 2012 7:04pm EDT  --  Report as abuse
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