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There is speculation Facebook is developing its own smartphone device, despite CEO Mark Zuckerberg’s assurances to the contrary. (Zef Nikolla/AP)
There is speculation Facebook is developing its own smartphone device, despite CEO Mark Zuckerberg’s assurances to the contrary. (Zef Nikolla/AP)

Tech

Facebook’s mystery announcement looms Add to ...

Facebook Inc. investors apparently like a good mystery.

The social networking giant – which is used by more than one billion people around the world – kick started some positive momentum last week by saying it would hold a media event at the company’s Menlo Park, Calif., headquarters on Tuesday, Jan. 15.

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In Facebook’s trademark white and blue branding, the invite simply says, “Come and see what we’re building.”

For those who have sunk money into what has so far been a languishing stock amid broader hype over social media companies, the prospect of a mystery is obviously seductive, especially given investors’ current reality. Facebook shares climbed steadily last week on the news, but hovering around $31 (U.S.) on Nasdaq, they are still well below the IPO price of $38.

It is unclear exactly what the Facebook announcement might be, though that has not stopped people from guessing. The firm, like other U.S. technology companies that hold over-hyped press conferences for incrementally improved products, is not immune to theatrical attempts at generating buzz.

But the sense of mystery has clearly improved some sentiment around Facebook, which despite being one of the world’s most visited social media sites has struggled to maintain a positive narrative since its botched IPO in May of last year.

Everything that could have gone wrong for Facebook’s coming out party did: People criticized the IPO price; traders were inconvenienced first by a delay in the day’s trading of Facebook shares, and then by trades not going through properly, filled later at reduced prices; and soon it was alleged that big clients had been tipped off about reduced earnings expectations before smaller investors, prompting a shareholder lawsuit.

Since then, despite improvements in the company’s earnings, there have been residual worries. In particular, Facebook has a mobile problem: Observers are divided on whether the company can continue hauling in revenue as the world increasingly accesses Facebook on mobile devices, where it is harder to earn revenue. In addition, many play Facebook’s games, such as Zynga Inc.’s popular Farmville, on their desktop computers.

Speculation is running high ahead of the Tuesday announcement: Some think Facebook may have been working on a smartphone, even though Facebook founder and CEO Mark Zuckerberg has avowed that idea publicly; others think it might be a more aggressive push into gaming or something to do with Facebook’s $1-billion purchase of the photo-sharing site Instagram. Regardless of what it is, and for all its success so far in terms of sheer growth, Facebook can certainly use the mystery momentum.

Follow on Twitter: @iainmarlow

 
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