Facebook Inc., the world’s largest social network, is planning acquisitions that will improve site design, keep its service reliable and advance mobile features to stave off competition from Google Inc. (GOOG) and Twitter Inc.
The company aims to make about 20 purchases in 2011, up from 10 last year and one in 2009, Vaughan Smith, Facebook’s director of corporate development, said in an interview.
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. As it grapples with competition from Google and Twitter, Facebook also must bolster its system so the site runs smoothly amid rapid growth. The company has made 13 acquisitions so far this year, including adding a mobile group- messaging service it rolled out to users this month.
“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 makes money from advertising and by taking a commission when software developers sell virtual goods on the site. As a closely held company, Facebook doesn’t disclose financials. 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.
In addition, Facebook has raised more than $2 billion from investors, including $1.5 billion from an investment led by Goldman Sachs Group Inc. (GS), announced in January.
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