Facebook Inc., owner of the largest social network, is working with HTC Corp. to build its own smartphone for release as soon as mid-2013, people with knowledge of the matter said.

The companies had intended to release the device as early as the end of this year, and pushed back the timetable to give HTC more time to work on other products, said some of the people, who requested anonymity because the plans aren’t public. Facebook is also developing a modified operating system for the device and has assembled a team of former Apple Inc. programmers to improve its iPhone application, people said.

More than half of Facebook’s 900 million users access the social network via mobile devices, while none of the $3.15 billion in advertising sales last year came from ads on phones. Chief Executive Officer Mark Zuckerberg could use a Facebook phone, with social-networking features built-in, to woo marketers and assuage concerns dragging on the company’s shares. 

“Usage is shifting to mobile, and they have not been able to monetize mobile,” said Victor Anthony, an analyst at Topeka Capital Markets Inc. “To the extent that it’s a device you own and carry around with you at all times, and it ties into the Facebook experience, it will be beneficial. They could then put a lot of ads onto the platform.”

Sally Julien, a spokeswoman for Taoyuan, Taiwan-based HTC, declined to comment.

Facebook stock has tumbled 23 percent since its initial public offering on May 17. The decline came in part due to concerns that the company isn’t making enough money from mobile advertisers. The stock climbed 3.1 percent to $29.34 as of the close Wednesday in New York. 
mobile strategy is simple: We think every mobile device is better if it is deeply social,” Menlo Park, California-based Facebook said in a statement. “We’re working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers to bring powerful social experiences to more people around the world.”

Former Apple staff hired by Facebook to work on mobile are: Greg Novick, who helped develop the touch-screen user interface; Tim Omernick and Chris Tremblay, who also worked on the device’s software; and Scott Goodson, who helped create the stock-market application, according to people with knowledge of the hires.

Last year, Facebook also bought Push Pop Press, a digital publishing software maker co-founded by Apple alumni Mike Matas and Kimon Tsinteris, two designers who helped build the look and feel of the iPhone and iPad software. Matas is credited with creating the battery logo that shows on the iPhone screen when it’s charging. A longtime BlackBerry user, Mark Zuckerberg converted to an iPhone in the past couple of years. 

(Bloomberg)