Zero chance of that. Facebook will be doing $16 to $20 billion in profit within five or so years. They'll have accumulated $60 to $80 billion in cash. They'll have a half trillion dollar market cap in the next few years. They'll liberally use the cash and market cap to buy into any market they're missing out on, just as Microsoft purchased LinkedIn and Skype to try to stay in the game.
These types of companies do not dislodge so easily such that they get "eaten for lunch" in the mere span of ten years. It's the exception for one of them to implode. This is especially true given that Facebook is still ramping, their sales growth is still extraordinary and their daily actives are still growing just fine for their size. They likely won't even peak on users for a few years, at a minimum; and afterward, they still have years to grow their non-US ad business a lot, because that part of their business is wildly non-optimized.
In ten years, Facebook will just be reaching the equivalent business plateau that Microsoft hit circa 2000-2003. They're still a very young business in the first half of their growth phase, they haven't even reached mild stagnation yet. A business doing $2 billion in quarterly profit, growing sales at 50%, and they're going to get eaten for lunch within a decade? It's extremely unlikely, as the mountain of cash they're accumulating will buy their continued place in the ecosystem, whether the anti-FB crowd likes it or not.
The Erie Railroad [1], founded 1832, bankrupt in 1859, 1878, 1893, 1938, and 1976, now largely in disrepair.
Woolworths [2], founded 1878, the first department store in the country, once owned the tallest building in the world. Started losing market share to Sears & catalog retailers in the 1930s, defunct in 1997. Sears was itself eclipsed by WalMart, which is on the verge of being eclipsed by Amazon.
International Mercantile Marine [3], owners of the Titanic, once monopolized shipping so thoroughly that the British government paid to keep Cunard (its only competitor) alive. Bankrupt in 1916, sold White Star Lines in 1926 to a company that collapsed in 1934, lost 2/3 of its fleet in the 5 years between 1930-1935, acquired in 1931, divested all passenger vessels by 1968, bankrupt in 1986.
TWA [4], founded via merger in 1930, almost went bankrupt in 1931, dissolved by act of Congress in 1934 but the brand was maintained by one of the daughter companies, purchased by Hughes in 1938, forced (by the government) to be sold in 1966, purchased by Icahn in 1985, bankrupt 1992, bankrupt 1995, final bankruptcy 2001.
There's a pretty massive survivorship bias when looking only at companies you've heard of, and even if they've survived in name for a century, it's not unusual for them to have periodic bankruptcies every 10-20 years that wipe out the shareholders.
My point is not that old juggernauts don't exist, it's that if big companies didn't fail often, they'd be far more commonplace and dominant than they are.
But the parent didn't say they can't go down, just that they won't implode within a decade of today. If IBM, Microsoft, or Cisco are dying it's a multi decade process. The dot-com companies that imploded 15 years ago were mostly losing money from day one.
Perhaps it would be more accurate to say they are now longer relevant in the sense they are not at the cutting edge. IBM like you mentioned is a good example. They earn billions still, and will for the foreseeable future, but they're hardly technological pioneers.
Optimism? It's simple extrapolation and a quick historical reference on how equivalently massive companies hold up over the near-term (5-10 years). I wasn't offering up an optimistic scenario.
In just three years they'll very likely hit $13 to $15 billion in annual profit or so (it'll be $8.5 to $9 billion in the next 4 quarters alone), and have $50+ billion in cash. What is inbound in the next three years that will hammer down upon a network carrying 1.7 billion users, that is still expanding and has no presently known threat to it, while possessing such extreme financial resources?
Absolutely nothing, that's what. No threat other than perhaps Snapchat could get enough scale in that time to be listed as a potential threat to them in the next three years.
Five years: $70 billion in cash, conservatively. $16 to $20 billion in annual profit, assuming a significant slowdown in their ad growth.
Then from the 5 to 10 year span, what's going to come flying in that is going to steal their $70 to $100 billion in cash? Or make their business disappear in just a few years. I can't name any other example of such a wild outcome happening, outside of maybe AOL, and they never had the financial muscle or scale that Facebook already commands.
That's the problem though. There's a good reason why just about every financial prospectus includes the phrase "Past performance is no guarantee of future results".
Then from the 5 to 10 year span, what's going to come flying in that is going to steal their $70 to $100 billion in cash?
Why are you so confident that you can predict everything that might happen in the next 5 to 10 years?
Why are you so confident that you can predict everything that might happen in the next 5 to 10 years?
The conservative, baseline prediction is generally "things tomorrow will be the same as today". Even if you stop their revenue growth (and there doesn't seem any good reason to think that is happening) then the parent's predictions are still basically true.
For the opposite to be true, FB doesn't just need to stop growing, it needs to shrink, and shrink very very quickly.
Can you think of a possible way Facebook could lose all their traffic in that 5 year timespan? All of FB, WhatsApp and Instagram disappearing all at once?
The conservative, baseline prediction is generally "things tomorrow will be the same as today"
Note that this line of thinking means that you'd never predict the rise of exceptional giants like Google & Facebook in the first place. If your line of thinking can't entertain the creation of these companies, it's unlikely to be any good at predicting their fall either.
Can you think of a possible way Facebook could lose all their traffic in that 5 year timespan?
My point is that since we can't imagine all the possible things that can or will happen in the next 5 years, the fact that we can't think of a possible way Facebook could lose all their traffic becomes meaningless and useless as a reliable source of predictions.
It's just the case that old companies aren't generally coming out of nowhere and all of a sudden turning everything around, part of the reason what apple has done over the past 10 or so years so impressive.
I didn't say there aren't any. I said that the markets aren't dominated by them, i.e. there is obviously such a thing as a large company declining, and it is obviously a common enough thing for there to not to be thousands of gigantic century-old companies among us.
It's plainly absurd to say "a company is big therefore it will grow." In my reading of the original comment I ignored the caveat of the 5-10 year timeframe. It's true that a gigantic company can almost definitely decline for 5-10 years without disappearing. It's not true that that means it will grow for those 5-10 years instead.
I think it's because a lot of those giants were commodities and could easily be replaced. Companies have learned the impact of branding, and they're now tied into our identities. So the social aspect keeps companies relevant and in power.
With regards to Facebook, when I'm looking over people's shoulders, what are they doing? Checking out their Facebook timeline, or Instagram, (or playing Pokemon Go for the time being). To unseat Facebook, Facebook would need to really betray the public's trust, and a competitor would have to provide an equally comprehensive service (and helpful migration tools). Google Plus's timing was poor and seemed to share everything with the pubic. ello had good timing, but they were invite-based and the minimal interface seemed like it lacked features.
Facebook is the AOL of the present, but unlike AOL they've managed to adapt (or acquire) to users' changing mediums for socializing.
Where's the lunch eating? Where's the wasteland of destruction of tech titans? Most of those are now old companies, some are very old.
Now name a dozen plus companies of comparable sizes in terms of sales that have actually been destroyed in the last 30 years. It is thus that it's the exception, exactly as I said.
DEC and Sun are both in the list above (as HP and Oracle). This isn't just a technical point - I suppose it isn't out of the question for a mega-merger/buyout of something like Facebook and Microsoft could occur.
Nokia too. Or you will also claim it to be a part of Microsoft?
All the companies I listed do not exist now. Some were bought. They were bought because they failed, like Yahoo! Are you going to claim that Yahoo! still exists as part of Verizon?
"Digital was acquired in June 1998 by Compaq, in what was at that time the largest merger in the history of the computer industry. At the time, Compaq was focused on the enterprise market and had recently purchased several other large vendors. Digital was a major player overseas where Compaq had less presence. However, Compaq had little idea what to do with its acquisitions, and soon found itself in financial difficulty of its own. The company subsequently merged with Hewlett-Packard (HP) in May 2002. As of 2007 some of Digital's product lines were still produced under the HP name."[1]
The Sun purchase wasn't as big, true. But they had multiple bidders, and sold for $5.6B:
"In late 2008, Sun was approached by IBM to discuss a possible merger.[4] At about the same time, Sun also began discussions with another company, widely rumored but unconfirmed to be Hewlett Packard, about a potential acquisition. By March 2009, talks had stalled between Sun and both IBM and the other potential suitor.
On April 20, 2009, Sun and Oracle Corporation announced that they had entered into a definitive agreement under which Oracle would acquire Sun for $9.50 a share in cash. Net of Sun's cash and debt, this amounted to a $5.6 billion offer from Oracle"[2]
These are both excellent of examples of companies that one might argue "failed" in the market place, but were still valuable years after their peak in the market. That is exactly what adventured is saying.
For a while I adhered to the x company has so much cash it doesn't matter if another company out innovates them they can just buy their way into the market. But now I don't think it is true anymore. If it was true in the late 90's early 00's when Microsoft was cash rich and their major breakthrough had reached it's peak (similar position to Apple today) they would have been able to buy themselves into the next big thing: mobile. But Microsoft couldn't, in reality they got completely marginalized.
> Facebook will be doing $16 to $20 billion in profit within five or so years.
With no user attrition, I think that prediction is pretty reasonable as their revenue per customer is still quite low with plenty of room to run. But if the fickle consumer starts to migrate elsewhere, as they are wont to do, and FB cannot purchase or build those elsewheres, then those forecasts could be in trouble.
MySpace suffered from having management who didn't know what they are doing especially after the sale to Murdoch. FB will do well because Zuck will still be running things.
Yahoo's stock price hasn't been crushed, unless you're comparing to 2000; in the last 10 years (because it's conveniently available), it's up 33% vs s&p500 up 66%. Not good, but hardly crushed like say Blucora (formerly Infospace), down 53% over the same time period.
But it is "crushed" if you consider that during the same time by putting your money into an index fund, you would have twice the return on your money with nowhere near the volatility. Getting half the return and twice the drama is kind of crappy.
Just wait until AI becomes smart enough to recognize and block ads. Then it is all over with these companies, because you can only push ads so far, and after that point people will start to object.
