Facebook hammered as user growth cools

SAN FRANCISCO, United States - Facebook shares took a hit Wednesday after the world's biggest social network reported weaker-than-expected user growth in the first full quarter since being rocked by a series of scandals on data privacy.

The company said profit was up 31 percent in the second quarter at $5.1 billion as revenues rose 42 percent to $13.2 billion.

But shares slumped 7 percent in after-hours exchanges after hitting record levels in official trading, with the quarterly report largely weaker than had been expected.

"Our community and business continue to grow quickly. We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect," chief executive Mark Zuckerberg said.

Zuckerberg has said he did not expect a meaningful impact from the uproar over data hijacked by political consulting firm Cambridge Analytica, but the last quarter's figures suggested some cooling.

The key metric of monthly active users rose 11 percent to 2.23 billion, below most estimates of 2.25 billion, while daily active users grew a weaker-than-expected 11 percent to 1.47 billion.

Almost all of Facebook's revenue -- $13 billion of the total $13.2 billion -- came from online advertising, a sector dominated by the California social network along with Silicon Valley rival Google.

Although Facebook shares were in a slump after the Cambridge Analytica scandal broke earlier this year, the stock had risen sharply and hit record levels this month.

According to the research firm eMarketer, Facebook is expected to hold an 18 percent share of the $273.29 billion worldwide digital ad market, behind Google's 31 percent.

According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate $8.06 billion in worldwide ad revenue this year.

source: news.abs-cbn.com

Facebook beats Wall Street's revenue estimates, shares rise

Facebook Inc shares rose after the bell on Wednesday after the social network reported revenue that beat Wall Street estimates, showing no initial impact on its lucrative ad business from a scandal over the handling of personal data.

Shares traded up 4.6 percent at $167, paring a month-long decline that began with Facebook's disclosure in March that consultancy Cambridge Analytica had harvested data belonging to millions of users.

Facebook's quarterly profit also beat analysts' estimates, as a 49 percent jump in quarterly revenue slightly outpaced a 39 percent rise in expenses from a year earlier. The mobile ad business grew on a major push to add more video content.

Facebook said monthly active users in the first quarter rose to 2.2 billion, up 13 percent from a year earlier and matching expectations, according to Thomson Reuters I/B/E/S.

The results are a bright spot for the world's largest social network amid months of negative headlines about the company's handling of personal information, its role in elections and its fueling of violence in developing countries.

Facebook, which generates revenue primarily by selling advertising personalized to its users, has demonstrated for several quarters how resilient its business model can be as long as users keep coming back to scroll through its News Feed and watch its videos.

Chief Executive Mark Zuckerberg said in a statement that Facebook was "investing to make sure our services are used for good."

Net income attributable to Facebook shareholders rose in the first quarter to $4.99 billion, or $1.69 per share, from $3.06 billion, or $1.04 per share, a year earlier.

Analysts on average were expecting a profit of $1.35 per share, according to Thomson Reuters I/B/E/S.

Total revenue was $11.97 billion, above the analyst estimate of $11.41 billion.

Tighter regulation could make Facebook's ads less lucrative by reducing the kinds of data it can use to personalize and target ads to users, although Facebook's size means it could also be well positioned to cope with regulations.

Facebook and Alphabet Inc's Google together dominate the internet ad business worldwide. Facebook is expected to take 18 percent of global digital ad revenue this year, compared with Google's 31 percent, according to research firm eMarketer.

Facebook said it ended the first quarter with 27,742 employees, an increase of 48 percent from a year earlier.

The company said it was increasing the amount of money authorized to repurchase shares by an additional $9 billion. It had initially authorized repurchases up to $6 billion.

Facebook shares closed at $185.09 on March 16, the day that the Cambridge Analytica scandal broke after the bell on a Friday. In the days immediately afterward, the company lost more than $50 billion in market value.

Even if the company's flagship social network, Facebook, suffers large reputational damage among users or advertisers, it still owns three more of the most popular smartphone apps in the world: Instagram, Messenger and WhatsApp.

source: news.abs-cbn.com

Facebook revenue smashes expectations as mobile ad sales surge

Facebook Inc.'s quarterly revenue rose more than 50 percent, handily beating Wall Street expectations as its wildly popular mobile app and a push into live video lured new advertisers and encouraged existing ones to boost spending.

The company's shares rose 9.5 percent in after-hours trading on Wednesday to $118.39, setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago.

Facebook also announced it would create a new class of non-voting shares in a move aimed at letting Chief Executive Officer Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded.

The company plans to create a new class of non-voting shares, which would be given as a dividend to existing shareholders. That would allow Zuckerberg, who wants to give away 99 percent of his wealth, to sell non-voting stock to fund philanthropy and keep the voting stock that assures his control.

Alphabet Inc. passed a similar proposal in 2014 that ensured its founders' control by creating new non-voting shares.

Some 1.65 billion people used Facebook monthly as of March 31, up from 1.44 billion a year earlier. Zuckerberg said users were spending more than 50 minutes per day on Facebook, Instagram and Messenger, a huge amount of time given the millions of apps available to users.

Advertisers are shifting money from television to web and mobile platforms, and Facebook is one of the biggest beneficiaries. It faces fierce competition in the mobile video market, where rivals Snapchat and YouTube also garner billions of video views every day.

Facebook recently expanded its live video product, rolling out several new features and making it more prominent on the app to encourage users to create videos and share them. The quarterly results showed success attracting advertisers with the move, and the company was able to expand its operating profit margin to 55 percent from 52 percent a year earlier.

"The company consistently 'warns' about higher spending, but they consistently manage their spending to deliver earnings upside. They're an impressive company, and they leave very little room for criticism," said Wedbush Securities analyst Michael Pachter, who called the operating margin a good surprise.

Facebook did not offer details on sales of its Oculus Rift virtual reality headset, but emphasized that the device was in its early days and said that sales would not significantly impact 2016 revenue.

The results come after disappointments for investors from several major Silicon Valley firms.

"After Intel and IBM last week, and then Twitter and Apple yesterday, this is by far the best number I’ve seen in technology," said Daniel Morgan, senior portfolio manager at Synovus Trust Company which owns about $40 million worth of Facebook shares, commenting specifically about Facebook ad revenue.

Facebook has not begun advertising on some of its most popular apps. "They haven't yet turned on the monetization spigot for Messenger or WhatsApp, so there should be significant headroom still," said Jan Dawson, chief analyst at Jackdaw Research.

The company's net income attributable to common shareholders nearly tripled to $1.51 billion, or 52 cents per share, in the first quarter from $509 million, or 18 cents per share, a year earlier.

Excluding items, the company earned 77 cents per share, beating Wall Street's 62-cent consensus.

Total revenue rose to $5.38 billion from $3.54 billion, with ad revenue increasing 56.8 percent to $5.20 billion. Mobile ad revenue accounted for about 82 percent of total ad revenue, compared with about 73 percent a year earlier.

Analysts on average had expected revenue of $5.26 billion.

If the stock proposal is approved - and Zuckerberg has a majority of voting stock - the company will effectively carry out a 3-for-1 stock split, issuing two shares of non-voting Class C capital stock as a one-time stock dividend for each share of Class A and Class B common stock.

Zuckerberg and his wife, Priscilla Chan, announced last year that they would give away 99 percent of their Facebook shares to fund charitable endeavors.

Investors said they were not concerned that Zuckerberg would have increasing control, pointing to the company's consistent ability to grow and exceed expectations.

"I honestly don't think anyone cares if he has more power, since he's done everything right since they went public," said Pachter.

source: www.abs-cbnnews.com

Facebook set to steal more TV ad dollars as video views soar

Watch out, Time Warner. It's not just Netflix and Hulu you have to worry about.

Along with Facebook's strong financial results released on Wednesday was a number that should send a chill through the cable and broadcasting industry.

The social network - whose shares rose 5 percent to hit a record high of $109.44 on Thursday - said its video views surged to 8 billion per day in the third quarter, from just 1 billion a year earlier, highlighting a rising threat to TV ad revenue.

The growth in video views presents the most significant near-term opportunity for Facebook as the company looks to grab a bigger slice of the TV advertising market, analysts said.

Cable companies in particular face an increasing threat to revenue as consumers switch to online streaming services such as Netflix and Hulu - a trend known as "cord-cutting".

"We think (Facebook) looks well positioned to capture an increasing portion of TV ad budgets as markets migrate toward data-driven, highly targeted online video ad campaigns," Jefferies analyst Brian Pitz said in a client note.

The online video ad market is likely to be worth about $17 billion a year by 2017 in the United States alone, Pitz said.

Time Warner Inc, the owner of cable channels TNT, TBS Cartoon Network, said on Wednesday that ratings for its key U.S. entertainment networks had dropped more than expected, which will result in a fall in ad revenue next year.

Walt Disney Co. owner of cable sports network ESPN, as well as broadcaster ABC, offered a gloomy outlook for its cable business in August.

Disney reports results later on Thursday.

"Video ad dollars will be the next big budget to shift online and FB is well positioned as one of the top properties to benefit," Susquehanna Financial analyst Shyam Patil said.

Atlantic Equities analyst James Cordwell said that about 50 percent of all media consumption was now online, but only 17 percent of non-search ad budgets were spent online.

"So, the opportunity for Facebook is to drive that 17 percent up to 50 percent, which would represent a $150 billion incremental advertising spend shifting from offline platform to online platforms," he said. "And the only place that can come from in meaningful volumes is TV."

ACTIVE USERS SURGE

In a bid to capture TV ad dollars, Facebook has launched several tools to target brand advertisers, including a way for marketers to plan, buy and measure Facebook video ads using target rating points (TRPs) - a metric similar to one used to sell TV ads.

"As the company further integrates TRP buying into the mix, it seems clear that advertisers continue to shift more incremental dollars to FB and we would expect further growth from video to continue," Barclays analyst Paul Vogel wrote.

Facebook said in September it had 2.5 million active advertisers, a 25 percent jump from February.

The potential viewership is huge.

Facebook - now valued at over $300 billion - said on Wednesday it now had 1.55 billion monthly active users, up 14 percent from a year earlier.

About 90 percent were mobile users. Daily active users exceeded 1 billion for the first time in the third quarter.

Buoyed by a surge in mobile users and advertising, Facebook's revenue jumped to $4.50 billion in the third quarter from $3.20 billion a year earlier. Analysts on average had expected revenue of $4.37 billion.

Excluding items, the company earned 57 cents per share, beating the average estimate of 52 cents.

At least 23 brokerages raised price targets on Facebook's stock, to as much as $155. The median price target is $125, according to Thomson Reuters data.

Facebook's shares were trading at $109.13 before the bell.

Of 52 analysts covering the stock, 48 have a "buy" or higher rating, three have a "hold" and only one has a "sell".

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Facebook revenue, profit beat forecasts; shares hit all-time high

SAN FRANCISCO - Facebook Inc. posted surprisingly strong profit and revenue growth as the world's largest social network grew even larger, with a spike in mobile users and advertising that lifted its stock to an all-time high.

The company on Wednesday reported audience numbers that suggest it is poised to take on mainstream media as an advertising force, helping investors to overlook Facebook's huge spending on hiring and building data centers.

Facebook now has 8 billion video views per day from 500 million people, compared with 4 billion views in April.

And Facebook's website and Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than 1 in 5 minutes spent on mobile devices in the United States, Chief Operating Officer Sheryl Sandberg said.

"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.

Facebook had 1.55 billion monthly active users as of Sept. 30, up 14 percent from a year earlier. Of these, 1.39 billion used the service on mobile devices.

"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Sandberg said in an interview. "We're also pretty focused on helping bring the next set of people who are not online, online."

Market research firm FactSet StreetAccount had predicted 1.53 billion monthly active users, with 1.36 billion on mobile.

Ad revenue grew 45.4 percent to $4.30 billion, with 78 percent of that coming from mobile versus 66 percent in the year-ago quarter.

"Part of the upside came from Instagram. The Instagram monetization engine has been turned on really rapidly for the coming quarters and years," said Arvind Bhatia, an analyst with SterneAgee.

Facebook did not disclose Instagram's ad sales figures. But the app is expected to bring in $595 million in mobile ad revenues this year, research firm eMarketer said. Its ad revenue is projected to grow to $2.8 billion by 2017.

Facebook's huge $3.0 billion spending, up 68 percent from the third quarter last year, did not seem to worry investors or analysts.

"I think the investors would like the company to continue to invest given that the opportunity is pretty large," said Shyam Patil of Susquehanna Financial Group.

The stock rose about 5 percent to an all-time high of $109.34 in extended trading, before paring gains to about 4 percent. It closed earlier at $103.94.

Total revenue jumped to $4.50 billion in the third quarter, from $3.20 billion a year earlier. Analysts had expected revenue of $4.37 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to stockholders rose to $891 million, or 31 cents per share, from $802 million, or 30 cents per share.

Excluding items, the Menlo Park, California-based company earned 57 cents per share, ahead of analysts' average estimate of 52 cents per share.

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