Facebook Just Quadrupled

How do you quadruple profits during a recession? Ask Facebook. The social superstar, on track for at least $300 million in 2008 revenue, is about to be awarded $873 million in pure profit.

A California district court on Friday ruled in favor of Facebook in its case against spammer Adam Guerbuez and his company, Atlantis Blue Capital, for violations of the CAN-SPAM Act. Guerbuez and his team were found to be pushing false or misleading pitches for ringtones, male (ahem) enhancement, and marijuana, via Facebook's messaging system. The price: $873 million in restitution.

The economics of spam
Spam is a huge business. Researchers from Universities of California and Berkeley and San Diego recently performed a study of the economics of Storm -- a spam bot whose pitches are similar in scope to what Guerbuez had been sending. What they found is that it's almost always worth the risk of getting caught, as noted in this quote:

The total daily revenue attributable to Storm's pharmacy campaign is likely closer to $7000 (or $9500 during periods of campaign activity). By the same logic, we estimate that Storm self-propagation campaigns can produce between 3500 and 8500 new bots per day ... Under the assumption that our measurements are representative over time (an admittedly dangerous assumption when dealing with such small samples), we can extrapolate that, were it sent continuously at the same rate, Storm-generated pharmaceutical spam would produce roughly 3.5 million dollars of revenue in a year.

Talk about serious revenue. No wonder Facebook is due $873 million -- it's the only way to discourage the pill pushers.

Not that they'll go away soon. VentureBeat says that News Corp.'s (NYSE: NWS  ) MySpace won a $230 million judgment against a spammer in March and yet my inbox is filled with digital garbage daily. So long as profits are available to cheaters, businesses will spend to defend themselves. Here's a look at five of the top digital security stocks according to our 120,000-strong Motley Fool CAPS database:

Company

Recent Price

CAPS Stars (5 max)

VASCO Data Security (Nasdaq: VDSI  )

$10.22

*****

CheckPoint Software (Nasdaq: CHKP  )

$20.76

*****

Blue Coat Systems (Nasdaq: BCSI  )

$9.11

***

Symantec (Nasdaq: SYMC  )

$12.04

**

McAfee (NYSE: MFE  )

$29.53

**

Source: Motley Fool CAPS.

Well done, Facebook. For everyone else: Put those attorneys to work. Our inboxes could use the relief.

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Fool contributor Tim Beyers spent yesterday unofficially participating in NaNoWriMo. He appreciates your support. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. The Motley Fool's disclosure policy loves coffee but prefers Twittering to jittering.


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  • Report this Comment On November 25, 2008, at 8:28 PM, yfbb wrote:

    Facebook most certainly did NOT Quadruple. It is well known that Adam Guerbuez doesn't have the assets to cover the fine in the first place. The judge could have made the fine be "100 bajillion gazillion dollars", and this article could be "Facebook just went a billion percent." It's not going to be paid. With any amount of forethought, Adam Guerbuez has already left Canada and is setting up shop in Switzerland.

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