• The Mercury News, Thursday, September 4, 2008 11:32 AM

Venture capitalist Jeremy Liew claims that Facebook will make about $35 million from the sale of virtual gifts this year, equating to roughly 10% of the social networking giant's revenue. This is just an estimate, of course, as Facebook is a private company with financial details that aren't easily scrutinized. That said, it has been widely reported that the company will make roughly $300-$350 million this year.

The San Jose Mercury News first reported Liew's analysis, which the paper says he came up with by crunching Facebook's available data over the last several weeks. Earlier in the year, Liew pegged virtual gift revenue at $15 million, following a similar analysis over a seven-week holiday period. "Ten percent is nothing to sneeze at,'' said Liew, adding that his ''ballpark'' estimate may be off by 25% or so.

Liew insists that precision isn't the point -- it's more important to point out that people are actually willing to make modest online purchases and send them to friends in a similar manner to the way people use greeting cards. According to Liew, the more people are willing to pay $1 to send virtual gifts on holidays, the more Facebook is able to collect credit card info and keep it in a secure "digital wallet" for its users. These wallets, the Merc points out, could be easily extended to cover things like casual games.

Read the whole story at The Mercury News »