Social networking giant Facebook confirmed Tuesday that Chief Financial Officer Gideon Yu is leaving the company, fueling speculation that the popular social networking site might be preparing itself to go public.
“We are grateful to Gideon for his contribution to Facebook and what we are trying to accomplish,” the company said in a statement.
Spokesman Larry Yu (no relation to Gideon) said Facebook had retained executive recruitment firm Spencer Stuart to conduct the search for a new CFO. Among the qualifications the company considers important are experience handling the financial operations of a large public company as well as “chemistry and fit,” Yu said.
Gideon Yu was previously a senior vice president and treasurer at Yahoo for 41/2 years, before accepting an offer to be chief financial officer at YouTube in September 2006. Within a month, he had helped put together a deal for Google to acquire YouTube for $1.65 billion.
After a brief stint as a venture capitalist at Sequoia Capital, Yu joined Palo Alto-based Facebook in August 2007. Yu quickly put his deal-making skills to work, helping arrange a transaction for Microsoft to buy a 1.6 percent stake in Facebook for $240 million. The investment, which stunned the financial community, valued the company at $15 billion.
Since then its valuation has fallen dramatically, according to a source familiar with Facebook. In December, Facebook canceled a program that would have allowed employees to sell their stock to outside investors. The source said the reason was that “the market went upside-down.”
In its Tuesday statement, Facebook emphasized its healthy financial position “despite the poor economic climate.”
Facebook is sensitive to speculation that it is running out of money after Business Week reported this week that the company is looking for as much as $100 million in debt financing to cover equipment costs.
Market research firm eMarketer estimates Facebook will sell $230 million in advertising this year. However, the source close to Facebook described the eMarketer figure as “low” and said the company beat its internal projections for the first quarter and is expecting to increase revenue by 70 percent.
The source also said Facebook has had profitable earnings before interest, taxes, depreciation and amortization for five quarters and is expected to be cash-flow positive by next year, meaning that the money coming in will be enough to cover operating expenses.
Nevertheless, there continues to be considerable debate inside Facebook over whether the company should move more aggressively to monetize its user base, which is now approaching 200 million.
Mark Zuckerberg, Facebook’s cofounder and chief executive, has argued that the company should focus on adding more users and keeping them happy. Tuesday, the blog AllThingsD reported that Yu had wanted to accelerate advertising sales and had urged Zuckerberg to consider alternatives to an IPO, including selling the company.
Contact Elise Ackerman at eackerman@mercurynews.com or 408-271-3774.
