Facebook: Sales up, profit down, shares falling

Facebook is bringing in more money but it’s also spending more. So after the Menlo Park company reported fourth-quarter results that beat Wall Street’s expectations, its shares are being punished on Wall Street.

The social network has addressed a previously oft-repeated concern: What about mobile? Answer provided by CEO Mark Zuckerberg during Wednesday’s analyst call: “Today there’s no argument. Facebook is a mobile company.” The company said more daily users now access Facebook from a smartphone or tablet than from a personal computer. And the numbers show the company is making progress in making money from mobile. Its smartphone-ad revenue of $305 million rose 41 percent from the year-ago quarter, and comprised 23 percent of the company’s revenue in the fourth quarter, up from 14 percent in the previous quarter.

“They said they were going to focus on mobile and they have executed there,” said Edward Jones analyst Josh Olson, according to the Merc article by Brandon Bailey and Dan Nakaso.

Some analysts were underwhelmed by the mobile numbers — “it didn’t show upside to the most bullish expectations,” said Jordan Rohan of Stifel Nicolaus, according to the Wall Street Journal. But “two quarters ago we didn’t really have any mobile revenue. We’re just getting started,” David Ebersman, Facebook’s chief financial officer, told the WSJ.

Still, the company’s quarterly profit fell 78 percent year over year, partly because of charges related to employee stock options.

Its costs and expenses also  jumped 82 percent to $1.06 billion from the year-ago period, and Zuckerberg said the company would be spending more on hiring and new features. “It’s important to start planting seeds,” he said, according to the New York Times. Among Facebook’s new features are Gifts, which allows users to buy presents for their friends, and Graph Search. Both have been said to have potential to compete with Amazon and Google, respectively.

Another seemingly common concern about Facebook, judging from the voluminous coverage of its earnings: how it can continue to roll out features that don’t turn users off. It has mounds of personal data, how can it take advantage of it without sacrificing user privacy and trust?

The company’s shares continue the roller-coaster ride they’ve been on since the company went public in May.  The company’s shares had been up about 70 percent since November, but they’re down about 6 percent to $29.36 as of this post after falling as much as 10 percent in late trading Wednesday.



Tags: , , ,


Share this Post