Facebook profits shrink, stock slides
(01-31 09:47)
Facebook is increasing its revenue from mobile with more users now accessing the social network via smart phones and tablets than from personal computers, but Wall Street remains unimpressed.
The company reported a US$64 million profit in the fourth quarter of last year, a steep drop compared with US$302 million 12 months earlier, while revenue grew 40 percent to US$1.585 billion, AFP reports.
But expenses jumped 82 percent to US$1.06 billion and will keep rising given Facebook's plan to hire aggressively and invest heavily in data centers.
Wall Street's response in after-hours trade was to push the stock down. The shares –
which fell by half following their debut in May but have since been on a steady climb – fell 3.46 percent to US$30.16 in electronic trades.
Facebook said earlier that its number of mobile users jumped 57 percent from a year ago to 680 million, and for the first time surpassed the number using computers, which came in at 618 million on average for December 2012.
More than 600 million people used Facebook daily – a 28 percent increase from the previous year, with the rise driven by mobile, the company said.
But the number of people connecting to Facebook from desktop computers was “flat or declining,’’ executives said during an earnings call with analysts.
“The big thing for us is we have more than a billion people using our product and we need to make Facebook really good across all the devices they use,’’ claimed co-founder and chief executive Mark Zuckerberg.
But he said Facebook will not make its own phone, “because it is not the right strategy for us,’’ though he said the social network “became a mobile company,’’ last year and by the end of December had 1.06 billion monthly users overall.
About 23 percent of Facebook's ad revenue came from mobile devices, affirming the company's efforts to find ways to make money from the unrelenting trend of relying on smart phones or tablets to access the internet. That figure was up sharply from 14 percent in the third quarter.
Ovum principal analyst Eden Zoller indicated that the figures were a boost for a company that took a pounding last year after a much-hyped stock listing fell flat.
“What stands out from Facebook's results is the centrality of mobile for its service strategy and growth,’’ he said.
“This solid progress on the mobile advertising front should be applauded as a key challenge for Facebook has been how to monetize its growing mobile user base.’’
Facebook played up the number of monthly active users, especially those connecting on smart phones or tablets.
Jon Ogg at 24/7 Wall Street, however, said investors “may raise some brows after seeing the margin compression, although some of this was known due to hiring and expense items.’’
Zuckerberg was adamant that the company was being underestimated and was on track to make “more money on mobile than we make on desktop.’’
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