Facebook Profit Story Pushes Shares to New High
Facebook shares on Wednesday soared to a new high on word that the social network's quarterly profit and user numbers jumped as it thrives in a world gone mobile.
Net income leaped to $791 million during the three months ended June 30 in a 138 percent increase from the $333 million made during the same period a year earlier, the world's biggest social network said.
"We had a good second quarter," said Facebook co-founder and chief executive Mark Zuckerberg.
"Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.
Revenue in the quarter surged to $2.91 billion, with approximately 62 percent of that money coming from ads served up on mobile devices such as smartphones or tablet computers.
Ad revenues overall were up 67 percent from a year ago to $2.68 billion.
Cashing in on the trend of Facebook members increasingly using mobile devices to connect to the social network has been seen by analysts as vital to its success.
The number of people who visited the online social network at least once a month climbed to 1.32 billion in a 14 percent rise from the same quarter last year, according to Facebook. The number of active users on mobile devices rose to 1.07 billion.
Facebook shares jumped more than five percent to $75.05 in after-market trades that touched record highs for the company that made its market debut in 2012 at $38.
"The numbers look good; this is a very strong quarter for them," said analyst Rob Enderle of Enderle Group in Silicon Valley.
"They look more like a real company now than a dot-com. Tactically, they are doing well."
Facebook could face some push-back from advertisers over how well ads result in people actually spending money on what is being promoted, the analyst noted.
Silicon Valley-based Facebook had a 5.8 percent share of global digital advertising revenue in 2013 and that share is expected to near eight percent by the end of this year, according to industry tracker eMarketer.
Worldwide spending on digital advertising was predicted to hit $140.2 billion this year.
Facebook will likely lay claim to 22.3 percent of the money spent this year on advertising on mobile devices, with Google's share expected to remain about 50 percent, according to eMarketer.
"Our momentum remains especially strong on mobile," Zuckerberg said in an earnings call.
Financial analysts were told to expect Facebook expenses to rise as the company invests heavily in people, products and infrastructure to fulfill a long-term vision of connecting everyone on the planet.
Zuckerberg said that Facebook this week completed its $2-billion buy of Oculus VR, a startup behind Rift virtual reality headgear.
Zuckerberg said that the acquisition of Oculus was a long-term bet that augmented and virtual realities along with artificial intelligence will underpin a computing platform likely to succeed mobile.
Oculus shareholders receive $400 million in cash and 23.1 million Facebook shares in the deal.
Meanwhile, Facebook hoped that its deal to buy mobile messaging service WhatsApp for more than $19 billion in cash and stock would close later this year.
WhatsApp is a mobile software program which allows users to exchange messages without having to pay telecom charges.
The WhatsApp buy is Facebook's biggest acquisition and comes less than two years after Zuckerberg's firm raised $16 billion in the richest tech sector public stock offering.
Facebook will also pump resources into beefing up its search capabilities to answer questions based on the unique information amassed at the social network,
Zuckerberg said that more than a billion queries are made daily at Facebook.
"Search for Facebook is going to be a multi-year voyage," Zuckerberg said.
"We can answer questions for you that no one else can."
Facebook's oft-stated mission of enabling everyone to share and connect includes eying the social nework's potential in China, according to chief operating officer Sheryl Sandberg.
"We have been studying and leaving about China for a number of years and remain very interested," Sandberg said, noting that businesses there use the social network to promote exports.
Source: Agence France Presse
| Copyright © 2012 Naharnet.com. All Rights Reserved. | https://www.naharnet.com/stories/en/140292 |