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Facebook 'Likes' Its Mobile Future

Stocks in this article: GOOG AAPL YHOO MSFT

NEW YORK ( TheStreet) - Facebook has seen tremendous growth in its mobile user base, going from more than 350 million users in September to 425 million at the end of December. Despite mobile being listed as a risk in the company's S-1, the future of the company may depend on it.

Facebook generated $3.71 billion in revenue in 2011, but it didn't generate any "meaningful" revenue from its mobile platforms last year. Advertisers have been slow to move to mobile advertising from desktop advertising.

Facebook isn't alone in making little if any money from its mobile strategy. Google (GOOG) has also had the same problem with its Android operating system. Apple (AAPL) purchased Quattro Wireless, a mobile advertising company in 2010, but has done nothing with it, presumably for the same reason.

Wells Fargo analyst Jason Maynard said in a research report on Google that mobile usage is about two years ahead of mobile advertising.

Despite these short-term headwinds, Facebook clearly sees the future of mobile advertising growth. In the prospectus, Facebook noted that the mobile advertising market is expected to boom in future years, growing at a 64% compounded annual rate. The market was $1.5 billion in 2010, and is expected to reach $17.6 billion in 2015.

Facebook said it believes "that we may have potential future monetization opportunities such as the inclusion of sponsored stories in users' mobile News Feeds." Clearly the growth will come from mobile users; Facebook just has to figure out how to execute its strategy. Facebook even went so far as to say that it expects mobile growth to surpass the growth rate of overall users.

Brian Blau, research director at information technology firm Gartner, said he thinks Facebook's future is in mobile. "Facebook's stated intention is to be the social network underpinning to users around the world. They need to be from a PC-centric experience to a mobile device centric experience," Blau said in a recent phone interview.

Some have even speculated that Facebook may develop its own mobile operating system, similar to what Apple has done with iOS. This could potentially help Facebook continue to drive ad revenue away from Google, Yahoo! (YHOO), Microsoft's (MSFT) MSN, and other advertising portals.

Whatever Facebook decides to do with its eventual new-found fortune, one thing is clear: mobility and driving revenue from it is key. Any further initiative on that front will most definitely be something which investors hit the "like" button on.

Interested in more on Google? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends.

-- Written by Chris Ciaccia in New York

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