Facebook revenues top estimates on mobile advertising

Facebook Inc's first-quarter sales exceeded projections, a sign that chief executive officer Mark Zuckerberg was on track in a drive to make more money from mobile advertising.

First-quarter sales were up 38 per cent to $1.46 billion, the social network said in a statement yesterday. Profit excluding certain items stood at 12 cents a share, as against an average prediction of 13 cents.

Zuckerberg has made software and advertising for smartphones and tablets a priority following  concerns that Facebook's mobile strategy was impacting revenues, in the four months following its market debut.

Investments designed to attract users on handheld devices and advertisers have since then yielded encouraging results according to analysts.

In the first quarter, mobile comprised around 30 per cent of advertising revenue, expanding from 23 per cent during the previous period.

However, the company's shares did not change much in extended trading, declining 1.2 per cent to $27.43 at yesterday's close in New York, down 28 per cent since its initial public offering a year ago.

Net income attributable to shareholders was up 58 per cent to $217 million, as against $137 million a year earlier, while operating costs rose 60 per cent to $1.09 billion, with the social network adding staff and pouring money into computers and software.

According to analysts, though the firm's first quarter 2013 financials showed an impressive 40 per cent jump in revenue to $1.4 billion, the company failed to translate higher revenues to profits, which barely rose from the same period in 2012, coming in at $219 million.

Though the daily and monthly user figures were impressive according to analysts, one figure would not go down well with investors was that of the claimed 751 million mobile users, a 54 per cent increase from the

same period last year. Facebook was known to have difficulty making money on mobile users and given its falling margins, the firm would need to work hard to reverse the trend, showing it could monetise what was clearly a fast growing and significant chunk of its users.

Facebook CEO Mark Zuckerberg made a brief statement that would fall short of addressing investors concerns, saying, Facebook had made a lot of progress in the first few months of the year, with strong growth and engagement across its community and launched several exciting products.

According to analysts, while there was no denying that Facebook's revenue figures were impressive, the firm though needed to show it could improve profits, otherwise doubts about its ability to make money from its mobile users would persist.