Facebook Reaches Critical Milestone Earlier Than Expected – IPO Pontential?

Published yesterday on IBD, Facebook announced recently that it has now reached a critical milestone of positive cash flow this year.  This is a pleasant surprise to many who expected the cash flow to be positive starting sometime in 2010. 

On the firm’s Web site, Zuckerberg said Facebook turned cash-flow positive in the second quarter, meaning it is generating enough cash to cover daily expenses. Facebook didn’t expect to be cash-flow positive until “sometime in 2010,” Zuckerberg wrote.

While company officials stress that no IPO is in the works, the cash-flow feat suggests that the popular site is managing costs well and that revenue is flowing in faster — two factors sure to appeal to investors eager to see the site turn its popularity into a sustainable business.

“If everything falls into place, it will bring investors back into the tech markets,” said David Menlow, president of IPO Financial Network. “It will significantly foster more venture capital money into new ideas that have yet to be launched. I expect investors will focus more attention on Internet technology markets once again.”

According to Marc Andreessen, the founder of Netscape and Facebook’s board member, Facebook expects revenue to reach $500 million. 

“The business is performing well, which allowed us to achieve our cash flow positive milestone earlier than projected,” Yu said via e-mail.

Facebook board member Marc Andreessen in July told Reuters he expects the social-network site to generate sales of $500 million this year. Yu would not confirm that.

Justin Smith, editor of the Web site Inside Facebook, said Facebook is likely to book revenue between $500 million and $550 million this year.

“Things are going well on multiple fronts,” he said. “Facebook is in a unique position with a unique degree of product insight and strategy that has allowed them to grow at an unprecedented pace.”

The bulk of Facebook revenue is advertising. The rest, about $70 million this year, will be micropayments for virtual goods — inexpensive “gift” icons such as flowers and teddy bears that people post to friends’ Facebook pages. Facebook is adding icons for game playing.

I personally don’t think Facebook is the next Google as far as the next big tech IPO, but it certainly opens up a lot of doors for Facebook with additional cash.  I’d imagine they would expand beyond the current social media platform and further increase its product line, so it will certainly be exciting to see Facebook issue an IPO.   Who knows.  Nothing in the pipeline, says Facebook.