This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Facebook's Hidden Jewel Proving to Be Boon for Shareholders

NEW YORK (TheStreet) –– Though Facebook's (FB - Get Report) advertising business is growing like weeds in an untended garden, the social media company's lower profile Open Compute Project is proving to be a genuine windfall for shareholders, having saved more than $1.2 billion over the past three years, according to sources close to the situation.

Facebook's Open Compute Project, which the company first implemented in April 2011, has focused not only on the tremendous amount of data it consumes and analyzes, but has helped increased overall energy efficiency while cutting costs. Facebook operates data centers in Prineville, OR., Forest City, N.C., Lulea, Sweden and is currently in the process of building one in Altoona, Iowa. 

Since it was founded three years ago, OCP has grown to include more than 150 official members and dozens of technology contributions from companies led by Microsoft (MSFT), Intel (INTC) and ARM Holdings (ARMH).

Facebook Makes the Biggest Change to Mobile Ever

Here's What It Looks Like Inside Tesla's Massive Factory

How Apple's Big Deal With IBM Hurts BlackBerry and Microsoft

Since April 2011, Facebook has saved enough energy to power 40,000 homes for an entire year. Carbon savings in that same period is the equivalent of taking 50,000 cars off the road for an entire year.

SunTrust analyst Robert Peck, who rates Facebook "buy" with a $72 price target, says the company's quarterly results will continue to be strong, and that new products are likely to give the stock a boost in the near future. Peck cited changes to the right hand rail ad formats, video-ad unit testing, the start of Instagram monetization and the announcement of its mobile Facebook Audience Network as among its next big products.

"We think these areas, plus further announcements will be instrumental in driving the next leg of growth for the company," Peck said in an analyst note.

Analysts surveyed by Thomson Reuters expect the company to earn 32 cents a share on $2.81 billion in revenue.

Though Google (GOOG) is the leader in the digital ad market, accounting for some 32% of digital ad spending worldwide last year according to eMarketer, Facebook is gaining ground. Facebook accounted for 5.8% in 2013, as it generated $6.74 billion in advertising revenue in 2013 ($7.87 billion in total revenue). The worldwide ad market was $120.05 billion, and eMarketer expects it to grow another 16.7% this year to reach $140.15 billion.

Goldman Sachs analyst Heather Bellini, who rates Facebook a "buy" with a $78 price target, says there's a good chance for "upside risk" to consensus estimates, as Facebook continues to increase its share of the overall corporate advertising pie.

"Overall, our contacts say the Facebook ad budgets continue to grow meaningfully, with the number of advertisers increasing," Bellini wrote in a research note. "Furthermore, many have expectations for meaningful increases in ad budgets as they look into CY15."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $105.41 -0.31%
AAPL $118.03 -0.71%
GOOG $748.82 0.07%
TSLA $229.71 5.30%
YHOO $33.16 0.62%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs