Competition in the smartphone market is set to get hotter with the entry of No.1 social network, Facebook Inc(NASDAQ:FB) , in the segment. The Mark Zuckerberg-led company is said to be working with HTC Corp on its first smartphone and is looking at mid-2013 for its debut in the segment, Bloomberg said quoting people with knowledge of the matter.
The smartphone device was originally to be released at the end of this year but the deadline was pushed back to allow HTC to work on more products, Bloomberg said in its report, quoting unidentified sources. The report also said that Facebook was working on a modified operating system for the device.
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Facebook had a hyped-up debut of its shares in May this year but its share price has fallen by more than a fifth since then as investors have been concerned over revenues from mobile advertisers. Mobile devices account for more than 50 percent of Facebook’s 900-million strong user base but mobile advertising is yet to pick up. A customised Facebook phone with built-in social networking features might give prospective mobile advertisers the confidence in Facebook’s reach.
“Our mobile strategy is simple: We think every mobile device is better if it is deeply social,” Bloomberg quoted the California-based Facebook as saying in a statement. “We’re working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers to bring powerful social experiences to more people around the world.”
Facebook has also mobilised a team of former Apple programmers to revamp its existing iPhone application, which has been criticized by users for being slow, Bloomberg said in its report.
Shares in Facebook, were trading down 6.6 percent at $27.41 at 12.35 P.M, ahead of its results later in the day.
Investors, in the meanwhile, are nervous about the social network’s inaugural results, which will be announced during trading hours, already spooked by the walloping the stock has taken in the market and its increasingly troubled revenue prospects.
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Earlier in the day the options market forecast a 14 percent swing in the stock either way after its earnings. Its biggest game provider, Zynga’s dismal performance on Wednesday, has already set the bar on expectations lower. There is also uncertainty over the valuations of social media companies, since there are few benchmarks.
Thomson Reuters data showed that the Facebook stock is still trading at around 70 times its earnings. An analysis by Thomson Reuters StarMine puts the company's intrinsic value at a modest $9.72 a share, or about one-third its current value, based on estimates of the company's projected growth for the next decade.
Analysts expect revenue in the second quarter to grow 28 percent to $1.15 billion.