It’s one of the company’s major challenges because the total is paltry compared with competing Internet companies. Google makes more than $30 a year from each registered user. Even struggling Yahoo and AOL make $7 and $10, respectively.

Once Facebook goes public, Wall Street will surely demand more. That means the social network will almost certainly have to attract a lot more users or be more aggressive with its advertising, perhaps by mining personal data even more than it does now.

But can Facebook do all that without spoiling the user experience?

The company may have a tough time increasing the number of ads on a site that has become primarily a home for online conversations.

“It’s a communications tool. Can you imagine what a turn-off it would be if we were talking on the phone and AT&T tried to play an ad in the middle of our conversation?” said University of Notre Dame finance professor Tim Loughran, who studies IPOs.

Facebook stock probably won’t begin trading until at least May, but analysts already believe the company will try to sell shares at a price that will give it a market value of at least $100 billion _ more than Yahoo, AOL and Hewlett Packard Co. combined.

To justify a valuation like that, Facebook will need to maximize its revenue to get closer to Google, one of its biggest rivals. Google’s revenue of nearly $38 billion last year translated into about $35 per registered user.

Facebook recorded $3.7 billion in revenue last year.

The question is whether it can bring in more money without alienating the 845 million users who have become accustomed to hanging out with friends and family on the social network without an onslaught of ads.

Part of that online environment has been by design. Facebook co-founder and CEO Mark Zuckerberg wanted to get as many as people as possible to create profiles on the website before figuring out the best ways to profit from all the information about their interests and connections.

In theory, those insights should enable Facebook to target ads to people most likely to be interested in certain products or services. That should appeal to marketers, giving the site enough leverage to charge more for its ads than other sites. If the ads work, Facebook should easily be able to increase revenue per user to $10 to $12 annually, said Wedbush Securities analyst Michael Pachter.

Before Google went public, it also faced questions about its ability to make money from selling ads next to search results, in emails and within videos. Evidently most users don’t mind because Google’s annual revenue is now about 25 times higher than in 2003.

Advertising isn’t the only way Facebook can make money. It charges a commission for some of the sales of games and other services on its website. Although advertising accounted for 85 percent of Facebook’s revenue last year, that was less than at Google, where ads accounted for 96 percent of revenue.

Most of Facebook’s non-advertising revenue comes from commissions paid by Zynga Inc., the maker of such popular Web games as CityVille and Words With Friends. In its IPO papers, Facebook says it may try to increase its revenue by introducing fees for other e-commerce features on its website.

Facebook, which is based in Menlo Park, Calif., easily could offer sales of movies, music, even houses and cars. But believing it can expand into those markets requires a huge leap of faith, said Hudson Square Research analyst Daniel Ernst.

“It’s like saying because Chipotle has been good at selling burritos in certain urban markets in the U.S., it should be able to make more money selling Chinese food in France,” he said.

Facebook says roughly half its audience _ about 425 million people _ now gets access to its service on smartphones, tablet computers and other mobile devices. But the site acknowledges it hasn’t figured out the best way to make money from mobile users.

The application-driven systems on mobile devices pose another threat because they could allow Zynga and other services to offer their own mobile apps to bypass Facebook and connect directly with users.

The rise of mobile devices also opens up an opportunity for Google to expand the audience of Plus, its social networking alternative to Facebook. Although it hasn’t done so yet, Google could make Plus part of the Android operating system that runs 250 million smartphones and tablets.

Zuckerberg, Facebook’s controlling shareholder as well as its leader, is promising to put users’ interests ahead of the company’s financial interests.

“Simply put: We don’t build services to make money; we make money to build better services,” Zuckerberg wrote in a letter included in Wednesday’s IPO filing. “These days, I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”

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But they are careful not to be overly optimistic even with the spring home-selling season coming up in just a few weeks.

Executives at PulteGroup Inc., MDC Holdings Inc., M/I Homes Inc. and Beazer Homes USA Inc. weighed in on the housing market on Thursday after their companies reported financial results for the October-December quarter.

Sales trends for the group were mostly mixed. But all but PulteGroup ended the quarter with far bigger backlogs of homes under contract than a year earlier.

Backlog is a leading indicator of potential home deliveries and revenue for homebuilders.

So it bodes well for the spring, when builders traditionally see a surge in home sales.

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The Menlo Park, Calif.-based company expects to raise as much as $10 billion, though some accounts say it could be less than that. At $10 billion, the company would be valued at $75 billion to $100 billion.

The highly anticipated documents Facebook files with the Securities and Exchange Commission will reveal how much it intends to raise from the stock market, what it plans to do with the money and details on the company’s financial performance and future growth prospects.

A stock usually starts trading three to four months after the filing.

Around the nation, regular investors and IPO watchers are anticipating some kind of twist _ perhaps a provision for the 800 million users of Facebook, a company that promotes itself as all about personal connections, to get in on the action.

After all, Facebook founder Mark Zuckerberg is anything but a conformist. He turns up at business conventions in a hoodie. “Cocky” is the word used to describe him most often, after “billionaire.” He was Time’s person of the year at 26. So when he takes Facebook public, why would he follow the Wall Street rules?

“Pandemonium is what I expect in terms of demand for this stock,” says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm. “I don’t think Wall Street would want to anger Facebook users.”

The most successful young technology companies have a history of doing things differently. Google’s IPO prospectus contained a letter from its founders to investors that said the company believed in the motto “Don’t be evil.”

Facebook declined to comment, but Reena Aggarwal, a finance professor who has studied IPOs at Georgetown University’s McDonough School of Business, believes Zuckerberg will emulate Google’s philosophy, at least in principle.

Founders Larry Page and Sergey Brin wanted an IPO accessible to all investors, and said so in their first regulatory filing. Facebook may say something similar when it files to declare its intention to sell stock publicly.

Along with Wall Street investment banks, Google used a Dutch auction, named for a means of selling flowers in Holland, to sell its shares. It took private bids and allowed investors to say how many shares they wanted and what they were willing to pay.

The process wasn’t smooth, though, and Google had to slash its expected offer price at the last minute. If you bought at the IPO, for roughly $85 a share, you still did well: Google closed Tuesday at $580.

More recently, when it filed for an IPO last June, Groupon, which emails daily deals on products and services to its members, added a letter from its 30-year-old founder, Andrew Mason.

“We are unusual and we like it that way,” the letter said. “We want the time people spend with Groupon to be memorable. Life is too short to be a boring company.”

It’s almost become conventional for tech companies to include an unconventional letter when they make their stock market debut. It’s widely expected that Zuckerberg, in the very least measure of showmanship, will write one.

But IPO watchers wonder whether there might be a provision specifically designed to give the little-guy investor, even the casual Facebook user who doesn’t invest, a piece of the debut.

“There is a feeling that there will be something unique in store for Facebook users,” Aggarwal says.

When most companies go public, they let Wall Street investment banks handle everything, with the sweet ground-floor stock price reserved for big institutional investors.

But that probably won’t do for Facebook, created in a Harvard University dorm room eight years ago. Or Zuckerberg, whose antiestablishment credentials include spurning a $15 billion takeover offer from Microsoft.

Few expect Zuckerberg to offer a Dutch auction because of the Google experience. But he is at least as unorthodox as Google’s founders. People expect him to be in the driver’s seat on Wall Street, rather than hand over the controls to bankers.

Facebook is a vital part of people’s Internet lives and the most successful company in the history of social media. Its closest competitor, Google+, has less than a tenth the active membership _ 60 million people.

“While there is no such thing as untouchable, Facebook is getting near there, with even Google imitating it,” says Sweet, of IPO Boutique.

In “really hot IPOs,” 90 percent of the shares go to institutional investors and 10 percent to everyday investors, Sweet says. It’s a perk for the banks’ biggest clients, like Fidelity Investments or T. Rowe Price or hedge funds.

The funds pay big commissions to the banks for regularly trading large blocks of stocks or bonds. Those relationships are deep and long-lasting _ and lucrative for the banks. The funds expect to be rewarded.

But Morgan Stanley and Goldman Sachs, the banks expected to guide the Facebook IPO, are in an awkward place: They don’t want to tick off 800 million Facebook users _ but they don’t want to tick off Fidelity, either.

Most IPOs are underpriced, and the stock usually shoots up the first day. Lucky large investors get the basement price and usually a big payday if they sell on the first day. Smaller investors buy on the open market, after the price has spiked, and pay more.

And most early investors do sell. One university research paper found that about 70 percent of the new stock changes hands in the first two days. Groupon introduced 35 million shares, but on the first day its shares were traded almost 50 million times.

Ann Sherman, associate professor and IPO expert at DePaul University, raised the possibility that Facebook could set aside a portion of its shares for the small investor and use a lottery system if there is a lot of demand.

She says the U.S. is the only country without IPO rules that put traditional investors on an equal footing.

“Given that this is such a huge and popular IPO, I’ve been hoping that Facebook would use this opportunity to try a new method to bring in retail investors _ a public offer where shares are set aside for only individual investors,” Sherman says.

But Zuckerberg will also probably be careful how he plays his cards. He doesn’t want to anger Facebook users, but his primary goal is to raise money.

The recent experience of Groupon’s faltering IPO holds tough lessons for young entrepreneurs. After analysts started questioning its accounting, Groupon had to amend its regulatory filing several times.

Trying to salvage the IPO, founder Mason shed his trademark jeans and T-shirt and donned a suit. He dropped the irreverent talk and spoke about the company’s growth prospects at the IPO “roadshow” to impress investors.

Other companies have encountered problems when they went public and tried to reward customers. Upstart Internet phone company Vonage wanted to give customers a chance to buy up to 15 percent of its 31 million shares at its IPO at $17 apiece.

But when the shares fell 13 percent on the first day of trading, many of its small investors that had put in orders to buy didn’t want to pay the offer price. It gained the dubious title of one of the worst IPOs that year, something Facebook wants to avoid.

It’s also more expensive to sell shares to many people. When thousands of small investors want to buy in, it becomes a logistical nightmare to make sure each investor gets a prospectus with all the important information.

Banks like large investors because it costs about the same to process an order of 50 shares as 50,000. But William Hambrecht, founder and CEO of WR Hambrecht & Co., a firm that runs IPO auctions, says companies that value their customers benefit in the long run.

He gives the example of Boston Beer, maker of Samuel Adams, which went public in 1995. Its founder, James Koch, wanted to reward the people who made his company successful: the buyers of Sam Adams.

Koch set aside a quarter of his shares for the small investor. The deal was a big success and attracted more interest from his beer drinkers than there were shares available. Some people left out were dissatisfied.

Hambrecht says about two-thirds of the investors who bought those shares still owned the stock two years after the IPO. Even today, about a third still own it. Hambrecht says that’s because these investors appreciate the company’s product.

“Our argument has always been that true buyers of your stock ought to be your own customer base,” says Hambrecht. “As the great investor Peter Lynch said: Invest in what you know.”

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Heads of European state and government meeting in Brussels on Monday pledged to offer more training for young people to ease their transition to the work force, deploy unused development funds to create jobs, reduce barriers to doing business across the EU’s 27 countries, and ensure that small businesses have access to credit quick cash. But they did not offer any new financial stimulus.

Over the course of Europe’s two-year debt crisis, leaders have repeatedly tried to reassure investors by pledging to cut spending and reduce their deficits. But those austerity measures have hurt growth, and Europe is now facing a new recession.

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It’s been two years since a financial crisis erupted in the birthplace of drama, and the final act is still unfinished. A second week of talks in Athens ended Friday with no deal between the country, the European Union and private holders of Greek bonds.

Remarkably, even after the crisis became such an international worry last year that the leaders of France and Germany were actually referred to as “Merkozy,” the European debt bomb could still explode, with Greece as the fuse.

Economists and investors see a Greek default as the biggest test of the world financial system since the crisis that followed the collapse of Lehman Brothers investment house in 2008.

It is also the biggest threat to what has been a successful start to the year in the U.S. stock market. The Standard & Poor’s 500 index has gained 4.7 percent, roughly half its average for a full year, in just four weeks.

“If talks break down next week and it looks like they can’t reach a deal, it raises all sorts of risks,” says Jeffrey Kleintop, chief market strategist at LPL Financial. “The stock market could probably lose half its gains for the year.”

On paper, it’s hard to see how Greece could take down financial markets in the U.S., the world’s biggest economy, with $15.2 trillion in goods and services churned out every year.

Consider:

_ Greece’s economy weighs in at euro220 billion, according to the International Monetary Fund’s estimates. That translates to $285 billion, which puts Greece’s economy on par with Maryland’s. The U.S. sells about $1.6 billion in weapons, medicine and other products to Greece each year, a minuscule 0.07 percent of exports.

_ U.S. banks say Greece on its own poses no danger to them. Unlike European banks, they’re not major lenders to Greek businesses and aren’t saddled with Greek government debt. In its most recent report, JPMorgan Chase, the largest bank in the U.S., said it had just $4.5 billion at risk in Greece, Ireland and Portugal combined. That’s about what the bank makes in revenue in two and a half weeks.

_ Many worry that U.S. banks would struggle to cover the insurance contracts they sold on Greece’s euro350 billion, or about $460 billion, in government debt. But the amount of insurance taken out on that debt totals $68 billion, according to the clearinghouse for the contracts. That’s hardly enough to pull down the banking system. And the banks have offset all but $3.2 billion of those contracts with other contracts. In other words, pocket change.

“The direct impact of a Greek default is almost zero,” Jamie Dimon, CEO of JPMorgan Chase, told CNBC on Thursday.

So what’s everybody _ well, everybody but Jamie Dimon _ worried about?

A breakdown in talks could trigger steep losses in stock markets in Europe and the U.S. Just as in 2008, banks could stop lending to each other, and the credit freeze could cause a market panic.

More importantly overseas, it could cause borrowing rates for Portugal and Italy to jump, pushing those much larger countries closer to defaults of their own Business Card Holders.

That’s only the beginning. A Greek default could unleash a host of larger problems. Some are already anticipated while others are likely to blindside even the closest observers, says Nick Colas, chief market strategist at ConvergEx Group. “In any complex system, you’re going to have unintended consequences,” he says.

He compares it to the collapse of Lehman Brothers: Analysts saw it coming, but the fallout in still caught them by surprise. A money market mutual fund found that it couldn’t redeem its customers’ money. Money market funds, which many considered as safe as savings accounts, suddenly looked suspect until the Federal Reserve backed them up.

At a conference on sovereign debt this week in New York, Steve Hanke, professor of economics at Johns Hopkins University, predicted that even commodity prices would plunge in response to a messy Greek default.

If Greece goes under, traders seeking safety would immediately sell euros and buy dollars, Hanke said. The dollar would soar and prices for commodities like oil and wheat, which are bought and sold in dollars around the world, would collapse. A single dollar would buy much more oil or wheat.

“If the bomb is set off by Greece, commodity prices will collapse,” Hanke said.

Hanke, who has advised governments around the world on managing their currencies, argued that Greece appears bound to collapse under its debts as its economy shrinks. “Greece is doomed,” he said.

So investors will be watching what happens this week in Athens. At the sovereign debt conference, Hans Humes, president of Greylock Capital Management, said this week could bring “the precedent-setting moment.” He warned that if the banks and investment funds that hold Greek bonds take steep losses, then Portugal, Italy and other countries shouldering heavy debt burdens can be expected to follow Greece’s lead.

It’s comparable to a messy default. Traders will respond by immediately selling government bonds from those countries, Humes said. Borrowing costs will rise, and Europe’s debt crisis will turn much worse.

Humes has been involved in the negotiations on the side of creditors holding Greek bonds so he has a stake in the game. But it’s a scenario other money managers often cite.

“There’s a fear that other countries won’t negotiate at all. They’ll just say, `We’ll pay you back at 50 percent or maybe less,” Kleintop says.

To Colas, the deepest concern isn’t how the S&P 500 reacts or whether the dollar rises if Greece drops the European currency. It’s the possibility for panic, especially a run on European banks.

What if people across France and Germany crowd into banks to pull their deposits? Banks, after all, are some of the largest buyers of government debt.

“Human emotions can drive things off the rails,” Colas says.

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The economy likely grew at annual rate of 3 percent in the October-December quarter, according to a survey by FactSet. The Commerce Department will release the actual figure Friday.

The gain would represent modest improvement from this summer, when the economy grew just 1.8 percent. However, even with the strong finish, economists believe the economy expanded just 1.7 percent for the whole year _ roughly half the growth in 2010.

And growth is expected to slow in the first three months of this year. A key reason is wages have failed to keep pace with inflation. That will likely force many consumers to pull back on spending after splurging over the holidays.

Consumer spending is important because it makes up 70 percent of economic activity.

Businesses are also expected to reduce spending in the first quarter after building up their stockpiles in the final months of 2011.

Richard DeKaiser, a senior economist at Parthenon Group, expects just 2 percent annual growth in the January-March quarter. But Kaiser says that should be the weakest quarter. He expects the economy to gain strength in each quarter and grow 2.6 percent for the entire year.

The year is off to a good start. Companies invested more in equipment and machinery in December. The unemployment rate fell to 8.5 percent last month _ the lowest level in nearly three years _ after the sixth straight month of solid hiring.

People are buying more cars, and consumer confidence is rising. Even the depressed housing market has shown enough improvement to make some economists predict a turnaround has begun.

Still, many economists worry that a recession in Europe could dampen demand for U.S. manufactured goods, which would slow growth. And without more jobs and better pay, consumer spending is likely to stagnate.

The Federal Reserve signaled this week that a full recovery could take at least three more years. In response, it said it would probably not increase its benchmark interest rate until late 2014 at the earliest _ a year and a half later than it had previously said.

The central bank also slightly reduced its outlook for growth this year, from as much as 2.9 percent forecast in November down to 2.7 percent. The Fed sees unemployment falling as low as 8.2 percent this year.

DeKaiser said part of his optimism stems from a view that housing sales and prices will rise moderately this year. That should lift the battered construction industry, which ended last year with three months of gains in single-family home construction.(backslash)

At the moment, housing remains the weakest part of the economy. New-home sales fell last month, and total sales for 2011 were the lowest on records dating back to 1963.

“I think the clouds will gradually lift over housing. Rising home prices will make consumers feel wealthier and this will translate into stronger consumer spending,” DeKaiser said.

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However, its shares fell because of a weaker 2012 earnings outlook than analysts expected.

Boeing posted net income of $1.39 billion Wednesday, or $1.84 per share. That didn’t include a tax benefit of 52 cents per share. Analysts surveyed by FactSet expected $1 per share. Revenue was $19.56 billion, also better than expected.

Boeing delivered 128 commercial planes during the quarter, up from 116 a year ago. Profits from commercial planes jumped 56 percent. Revenue rose 31 percent.

Profits from defense rose 6 percent. Revenue rose 4 percent. Defense contractors are just beginning to see what is expected to be a major slowdown in military spending in the U.S. and Europe. Boeing says defense revenue will fall roughly 5 percent in 2012.

Boeing predicted a 2012 profit of $4.05 to $4.25 per share. Analysts had been expecting a profit of $4.90 per share. Not counting 83 cents per share in higher-than-expected pension expense and other one-time items, Boeing expects an adjusted profit of $5.06 to $5.26 per share.

The company forecast revenue of $78 billion to $80 billion. Analysts were expecting $78.45 billion.

Boeing, based in Chicago, says it plans to deliver 585 to 600 commercial planes this year, up from 477 last year. It delivered three of its new 787s last year, and nine of its new 747-8 superjumbo jets. Boeing says revenue from commercial planes will grow at least 31 percent this year.

Shares fell $1.94, or 2.6 percent, to $73.42 in morning trading.

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Yields on benchmark 10-year notes climbed 16 basis points, or 0.16 percentage point, the biggest weekly increase since the five days ended Dec. 23, as reports showed fewer Americans than forecast filed for unemployment benefits and home sales rose for a third month in December. The refuge appeal of Treasuries eased as Greek officials held debt-swap talks and European bond sales saw increased demand. Policy makers are expected by analysts to say they

“It’s important to keep learning and to keep things interesting,” Wolfgram said last week in an interview at a coffee shop near his Central West End home. “If you’re in a rut, and are feeling a little too comfortable, then every five years you need to add a new dimension to your life. That way you won’t lose out on something.”

A phychiatrist Wolfgram adheres to his own advice.

As middle age approached, Wolfgram abandoned a sedentary lifestyle to include a run in his daily routine. He has since competed in 60 marathons and Ironman events, once finishing first in the world in his age bracket.

The ID and key card underscore Wolfgram’s most recent commitment to personal evolution — a bid to re-enter the workforce.

The Metropolitan St. Louis Psychiatric Center responded to the submission of his resume with an invitation to an interview.

The “very nervous” Wolfgram apparently impressed the right people, because the resulting job offer was quickly followed the mandatory drug test, orientation, issuance of the key card and ID and, finally, his first day on the job.

Most of us are familiar with the drill.

Not Wolfgram: He last pursued and was subsequently hired for a salaried position 50 years ago when, to put it in perspective, John F. Kennedy occupied the White House and Barack Obama was still in diapers.

A half century later, Wolfgram, 79, leaped into the 21st Century from a work environment defined by segregation, households supported by a single salary, typewriters and manual labor.

“It’s sort of like riding a bike, but not quite,” he said.

The University of Iowa med school graduate took his leave from that world shortly after completing his training at the Washington University School of Medicine in the early 1960s.

Establishing a private practice, he set his own hours, made business decisions that had an impact only on him and his patients and reported to no one.

Now, to his astonishment, Wolfgram has a boss.

As well as an office, telephone extension with a dedicated line and the expectation that he’ll show up at 8:30 every morning and remain on the job until 4:30 in the afternoon, with a half hour for lunch.

Fifty years after he last punched the proverbial clock, Wolfgram arrived at his new place of employment with two primary objectives: to avoid getting lost in the labyrinth hospital corridors, and to pinpoint the location of the bathroom nearest his office without getting lost.

He got through those first days by sticking to another bit of advice he’d often imparted to others - “There are stupid answers, but never a stupid question.”

Wolfgram returned to the work place partially out of necessity.

A witness in criminal and civil proceedings, he is required by many states to maintain an active practice in psychiatry to meet the standard for expert testimony.

Beyond that, his position at the the psychiatric center also scratches the internal itch that propels him forward at an age when most of his contemporaries are long retired.

Between his private practice and periodic work in hospitals, Wolfgram through the years managed to stay up-to-date with the technology, medicine and research that has moved psychiatry forward over the past half century.

It’s thus the non-clinical aspects of the workplace — particularly the collegiality that has replaced the professional detachment of 50 years ago — he finds most interesting.

“Everybody is always saying hello, asking how I am and wishing me a nice day,” he said. “I wonder if they are programmed in some way.”

Wolfgram believes his own re-entry to the workplace carries a lesson for other job-seekers, be they recent college graduates or displaced workers landing on their feet after a prolonged layoff.

“No matter how educated you are, you’re starting at the bottom of the ladder,” he said.

And as he’s learning, there’s no where to go but up.

Even at age 79.

QUOTE OF THE WEEK

“Congressmen taking responsibility or taking credit for helping create jobs is like Al Gore taking credit for the Internet.” - Former Massachusetts Gov. Mitt Romney mocking claim by fellow GOP presidential hopeful and ex-House Speaker Newt Gingrich’s claim that he played a role in creating 16 million jobs in the 1980s.

Source: Bloomberg

BY THE NUMBERS

60 - Percentage of Rochester, N.Y. workforce drawing paychecks from Eastman Kodak, Xerox and Bausch + Lomb in 1987. 

6 - Percentage of  Rochester workforce employed by the same three companies today. 

Source: The New York Times 

FINAL WORD

“The right claims the stimulus failed because it didn’t bring unemployment down to 8 percent in its first year, as predicted by Obama’s transition economic team. Instead, it peaked at 10.2 percent. But the 8 percent prediction was made before Obama took office and was wrong solely because it relied on statistics that guessed the economy was only shrinking by around 4 percent, not 9. Remove that statistical miscalculation (made by government and private-sector economists alike) and the stimulus did exactly what it was supposed to do. It put a bottom under the free fall. It is not an exaggeration to say it prevented a spiral downward that could have led to the Second Great Depression.” - commentator and blogger Andrew Sullivan

Source: The Daily Beast

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