Facebook earnings dropped in fourth quarter as R&D spending rise

Nathan Andrada – Fourth Estate Cooperative Contributor

New York, NY, United States (4E) – Facebook announced a significant fall in profits in the fourth quarter due to higher spending on research and development.

The social network site reported earnings of $64m in the October to December quarter last year, which is sharply lower that $302m in the previous year.

Facebook shares dropped 5.1 per cent in after-hours trading to $29.64 despite the results beating Wall Street estimates and the company achieving its first quarterly profit since it went public back in May. Even if the stock is still below the IPO price of $38, it has gained 42 per cent over the past three months.

The company said revenue jumped 40 percent to $1.6bn driven by a huge increase in advertising revenue, nearly quarter of which originated from mobile platforms.

Analysts have been keenly following the company’s ability to transform its business from web to mobile platforms. Mobile revenues, which accounted 23 per cent of its overall revenue in the quarter, is a key indicator of Facebook’s ability to execute its plan towards becoming a mobile company.

Facebook’s monthly active users, which reached 1 billion late last year, increased by 25 percent from the previous year to 1.06 billion while daily active users jumped 28 per cent to 618 million. Mobile monthly active users saw a sharp rise of 57 per cent to 680 million.

In the third quarter, the company reported 1.01 billion monthly visitors and 604 million monthly active users who accessed the site using their mobile devices.

Mark Zuckerberg, the company’s founder and CEO, said that Facebook helped connect over a billion people last year and also became a mobile company.

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