
Facebook is planning acquisitions that will improve site design, keep its service reliable, and advance mobile features to stave off competition from Google (GOOG) and others.
The company aims to make about 20 purchases in 2011, up from 10 last year and one in 2009 according to Vaughan Smith, Facebook’s director of corporate development. The company has made 13 acquisitions so far this year, including adding a mobile group-messaging service it rolled out to users this month.
To date, Facebook’s acquisitions have been small, with target companies sometimes having one or two employees. Many of Facebook’s acquisitions have been targeted at adding talent as the company vies with larger rivals for skilled technology workers.
The company uses a combination of cash and stock for acquisitions, according to Lou Kerner, an analyst at Wedbush Securities. Facebook also can sell shares in the secondary markets for additional cash.
“Two years ago we didn’t have a track record in acquisitions,” Smith said. “While we expected them to work well, it was still a crapshoot how they’d turn out. We’ve built a culture that supports entrepreneurs, and it’s working incredibly well.”
“Facebook is just trying to get the smartest people possible in any way it can,” said Debra Aho Williamson, an EMarketer Inc. analyst. “The idea of bringing in new talent, smart talent, people who have created interesting products that Facebook can capitalize on, is going to be important to them.”
Facebook is betting that a focus on design will entice people to spend more time on the site, while adding mobile services can cater to the growing number of members using handheld devices.
Purchases in design this year have included Sofa, a software and user-interface company, and Push Pop Press, which offered publishing software for touch-enabled devices.
“The challenge is that Facebook does a lot more things than it used to… To get that all to be easily navigable is not simple”, said Josh Bernoff, an analyst with Forrester Research.
As new features pile up, Facebook needs to manage its user-interface design, said Bernoff.
Facebook makes money from advertising and by taking a commission when software developers sell virtual goods on the site. A person with knowledge of the matter said in May that the company is likely to generate more than $2 billion in earnings before interest, taxes, depreciation, and amortization this year.
Channels: Facebook, google, user experience

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