Facebook reported a sharp drop in profits from a year ago, prompting a fresh decline in the share price of the world's biggest social network.
Facebook reported a profit of $US64 million ($A61.3 million) in the fourth quarter compared with $US302 million in the same period 2011. Revenue grew 40 per cent to $US1.585 billion.
Facebook shares fell as much as 11 per cent in extended trading. The shares had risen 1.5 per cent to $31.24 by the close in New York. The stock has fallen 18 per cent since the initial public offering price in May.
Facebook said the decline in net income came as the company ramped up investments in new mobile and ad services that boosted costs. Facebook spent more to roll out new ad services, including mobile, in the past year as it grapples with rising competition for marketing dollars from larger rivals.
While Google is expected to grab 57 per cent of the U.S. mobile-ad market this year, Facebook is expected to remain a distant second with 12 per cent, EMarketer estimates.
“A lot of these products are pretty new,” said Scott Kessler, an analyst with S&P Capital IQ, who rates the stock a hold. “It’s just going to take some time.”
Mobile contributed 23 per cent of total advertising revenue, according to Facebook. That compares with 14 per cent in the third quarter. Analysts at JPMorgan Chase expected mobile to contribute $US384.2 million, or 27 per cent of ad revenue in the latest quarter.
Profit excluding some items was 17 cents a share. That compares with analysts’ prediction for 15 cents.
Facebook is investing in new products as it seeks to attract users and keep them on the site. Earlier this month, the company announced a revamp of its search service that lets members find information on people, places, photos and interests.
The company also has upgraded its mobile applications with new versions for phones running Google’s Android software and Apple Inc.’s iPhone.
Facebook reached 1.06 billion users during the fourth quarter, up from 1.01 billion in the third quarter. The number of mobile users was 680 million, up from 604 million in the third quarter.
Analysts had been pushing up ratings amid growing optimism for accelerated revenue growth. The proportion of analysts covering Facebook with a buy rating has risen to 65 percent from from 52 per cent on October 23, when Facebook posted third-quarter sales that beat estmates, according to data compiled by Bloomberg.