Facebook is tech's it company: Column

SAN FRANCISCO — Today's lesson in Silicon Valley lore: The pecking order can change awfully fast.

Take Facebook, which reported earnings of 50 cents and a 39% jump in revenue to $4.04 billion on Wednesday. As is customary, the company beat Wall Street sales estimates.

Facebook shares (FB), which ended the day up nearly 2% to $96.98 (close to a 52-week high) before earnings were announced, initially slid in after-hours trading.

The social network is now worth a jaw-dropping $267.6 billion.

That's right, the same Facebook that stumbled out of the IPO gate in 2012 and, as recently as 2013, had a legion of doubters in Silicon Valley and on Wall Street. Today, it's branching in multiple directions like an eight-armed digital octopus, the darling of the same business and investor community. Some suggest the 11-year-old company could have as much upside as Apple or Google.

"Facebook is well positioned, executing well, and meeting or beating expectations," says Brian Blau, research director at Gartner.

Success in uber-competitive Silicon Valley often comes down to product cycles, acquisitions, charismatic leaders and pure luck. Facebook has that in spades these days — not to mention perceptive planning and a world-class operation run by Chief Operating Officer Sheryl Sandberg.

The winning combination of a successful venture into the mobile market, a rejuvenated advertising model based on mobile and measurement tools, and a string of acquisitions that made Facebook a go-to destination (WhatsApp, Instagram) have made Facebook a model of efficiency and creativity.

Facebook’s advertising wins have come at the expense of Twitter. While Zuckerberg & Co. have mopped up on mobile devices and desktop computers, Twitter — which has made some inroads in advertising — has had relatively little to tweet about, by comparison.

By 2017, Facebook’s slice of worldwide ad revenue will be $23.9 billion, up from $15.5 billion this year, according to eMarketer. Twitter will reach $4.1 billion in 2017, compared with $2.1 billion this year.

And Facebook is upping the ante: It plans to offer free basic Internet on mobile devices via any mobile operator. The company now partners with operators to launch the service in different countries.

Facebook’s display ad prowess has had a ripple-like affect on the tech industry: Besides its impact on Twitter, Facebook has intensified pressure on Google.

Most consumers (51%) believe Facebook ads are more in line with their interests than those (17%) who said the same of YouTube, according to a study by Adobe Digital Index.

Adobe Digital Index principal analyst Tamara Gaffney says Google has not kept pace with the way Facebook has sharpened its display ads. Facebook’s 1.2 billion users can click one button to share an ad; on YouTube, it’s clunky, she says.

Video marketers, however, are unlikely to ditch YouTube, where videos on average receive more views and have a longer shelf life than those posted on Facebook.

Facebook's merger strategy, meanwhile, "shows wisdom and a high batting average,” says Debra Aho Williamson, principal analyst at eMarketer.

Indeed, there are few geographic markets in which Facebook apps are not dominant. "Facebook realized it needed to be more than one app," Williamson says.

Of course, Silicon Valley history can change quickly — from rags to riches and back — and Facebook is not immune. Twitter was on a quarterly hot streak until its ad business hit the skids in its first quarter . That has as much to do with the company's sluggish user growth as it does with Facebook's advertising prowess.

Before we anoint Facebook to the Pantheon of tech giants, however, we should heed the words of Blau and others. Facebook is still a work in progress on several development fronts: media, wearable devices and search. "(Facebook) is not yet at the same level as an Apple, Google, Microsoft or Amazon," Blau says.

And, oh those nettlesome quarterly earnings reports...

On Wednesday, Facebook shares tumbled 5% in after-hours trading because investors were disappointed with an 82% rise in spending despite quarterly revenue and earnings that topped analyst projections. In tech, it always seems to be something.

Michael Dell and others bemoan the curse of the 90-day shot clock, when the expectations of a company rise and sag on their quarterly financial performance.

This was a major motivation for Dell's company to go private, and for countless start-ups to take their sweet time going public.

One quarter, bejeweled. The next, bedraggled.

Follow USA TODAY's San Francisco Bureau Chief Jon Swartz: @jswartz