In a rare peek into Facebook's finances, Santa Clara County records show that the social networking giant spent at least $116 million buying business equipment like laptops, servers and furniture last year, an eye-popping spree that was nearly three times more than the previous year.
The tax data, compiled yearly by the Santa Clara County Assessor, provides a fascinating window into the relentless reordering of the tech hierarchy in Silicon Valley. Powerhouses like Facebook, Google (GOOG) and Apple (AAPL), benefiting from their expertise in "cloud" computing and the mobile Web, have a presence in the valley that now rivals and often surpasses longtime stalwarts like Hewlett-Packard (HPQ), Applied Materials and Intel (INTC).
"It really is the history of the business cycle in Silicon
Indeed, half the companies in the top 10 of the county's "business personal property" list a decade ago are off the list in 2011.
The tax data tracks the total value of a company's computers, furniture and other business equipment, and the annual change in that value. It is separate from the tax a company pays on the real estate it owns.
Facebook didn't rank among the county's top 40 business personal property values in 2010. By workforce, it is tiny compared to a Cisco Systems (CSCO) or Yahoo (YHOO). But its 183 percent jump in personal property value over the course of the year places the social network 11th in total equipment value, right behind HP.
In total value of business personal property, Google and Apple both ranked among the top four companies for the first time, trailing only Cisco and Lockheed Martin. Google spent more than $154 million on computers and business equipment during the past year -- the county's biggest value increase in dollars.
But Facebook's one-year rise relative to other valley companies "is probably unprecedented," Stone said.
The newly published $29.6 billion personal property list for 2011 includes a good sign for the local economy. The combined value of equipment owned by more than 32,000 local businesses was up 2.54 percent over 2010, partly reversing the 7.64 percent drop between 2009 and 2010 -- the worst performance since the dot-com bust.
"That's a real good indicator about what's happening in Silicon Valley," Stone said of the turnaround. "When you're hiring people, what do you do? You buy printers; you buy laptops; you buy copiers. If you're laying off people, you're not leasing cubicles. It's an indicator of which companies are growing, and which ones aren't."
In 2001, Facebook founder Mark Zuckerberg was still making friends in high school, and Google was just starting to perfect the keyword search advertising platform that powered its blockbuster public stock offering three years later. Recently reinstalled Apple CEO Steve Jobs had just introduced the iPod, paving the way for the Cupertino company to become a dominant force in mobile technology with its iPhones and iPads.
All three companies are benefiting as tech moves into the so-called "post-PC era," either by offering software services that run on the "cloud" -- far-flung networks of servers in remote data centers linked by the Internet -- or by creating a powerful presence on the mobile Web.
Some local companies with no obvious Internet link are also beneficiaries. Space Systems Loral, which builds commercial satellites, had a 16 percent jump in the value of its personal property last year. The company has expanded its Palo Alto campus, in large part to meet the demand for communications satellites that provide broadband Internet services.
The annual spending on personal property is one of many ways to analyze a company, and it is an imperfect measure. The fact that companies like HP, IBM and Intel no longer dominate does not mean they are failing, only that they are not buying equipment locally at the same rate. It's also imperfect because it favors companies that manufacture products over those that produce software.
Santa Clara-based Intel, for example, has moved its chip manufacturing from Silicon Valley to other Western states or overseas, where costs are lower and government incentives are higher, a key factor in the 63 percent drop in its personal property values since 2001.
Silicon Valley is remarkable not only for the rapid ascent of successful young companies, but also for the fast decline when technology shifts, said Marguerite Gong Hancock, associate director of the Stanford Program on Regions of Innovation and Entrepreneurship.
But Silicon Valley's blend of global talent and connections has also allowed companies to reinvent themselves, she said. Consider HP, born in the 1930s as a maker of electronic test instruments; or Apple, born in the 1970s as a desktop computer maker.
"You have two things happening: the churn, which is accentuated here, the speed of it," she said. "But also you have companies that are adaptable, that were born in other eras. Apple is a prime example of that. It could have been derailed in the PC era, but look at it today."
Major valley presence
Facebook is widely expected to hold a public offering of stock sometime in 2012. Until then, vital statistics like the company's sales and business model are hidden from public view.
But not Facebook's tax bill. The value of its computer hardware and many kinds of software, along with furniture and other equipment, is $179 million, up from $63 million in 2010. Cisco became the first company to top $2 billion in personal property value this year, followed by aerospace manufacturer Lockheed at $719 million, Google at $652 million and Apple at $480 million.
The personal property list is used to compile the local tax bill, and Facebook's growth has a bittersweet note for Santa Clara County. While Facebook will pay about $1.8 million in personal property taxes this year, it is moving to its new Menlo Park headquarters, meaning San Mateo County will get those revenues soon.
Facebook and Google declined to comment on their new power rankings. But both companies, and Apple, have been hiring rapidly.
Facebook's personal property growth "highlights the fact that they are becoming a major presence in the valley," said Lou Kerner, an analyst with Wedbush Securities. "They are spending a lot of money to grow, and putting a lot of money into the economy in the valley."
Contact Mike Swift at 408-271-3648. Follow him at Twitter.com/swiftstories.
Increase in combined value of equipment owned by 32,000 local businesses since 2010.
The change: The value dropped 7.64 percent from 2009 to 2010.