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Faceboook (FB) Revenue Surges on Mobile Ads - Stocks in the News

Facebook Inc (FB), capitalizing on a surge in mobile advertising revenue, reported fourth-quarter earnings Wednesday that beat Wall Street estimates.

Revenue at the Menlo Park, California-based company rose 49 percent to $3.85 billion from $2.59 billion the year before. Mobile advertising represented a majority of that increase, accounting for 69 percent of revenue in the fourth quarter compared with 53 percent in 2013. Analysts were expecting revenue of $3.8 billion.

Net income rose to $701 million, or 25 cents per share, a 34 percent jump from $523 million, or 20 cents per share, a year earlier. That was generally in line with estimates on Wall Street of 25 cents for GAAP income.

Excluding certain expenses, however, profits rose to 54 cents per share in the most recent quarter, compared with 32 cents the year before. The company’s adjusted earnings significantly outperformed the Zacks Consensus Estimate of 33 cents.

Platform Growth

As Facebook entered its second decade, the social network continued to grow. Daily active users grew 18 percent year-over-year to 890 million and mobile daily active users grew 34 percent to 745 million.

“We got a lot done in 2014,” said Mark Zuckerberg, Facebook founder and CEO, in a press release Wednesday. “Our community continues to grow and we’re making progress towards connecting the world.”

The company’s growing user base allowed it end 2014 on a high note. Revenue for the full year advanced to $12.47 billion, the first time Facebook has posted profits above $10 billion.

Bottom Line

Facebook finished its fourth quarter with a strong performance based on growing its mobile advertising revenue. Its future, however, depends on proving its rising expenses will translate to profits. Even though revenue continues to soar, so do expenses, especially those related to Zuckerberg’s talk last quarter of “investing aggressively” in other companies and new technologies.

Facebook shares were down in after-hours trading, falling $1.19, or 1.6 percent, to $75.95 from $76.24 at the closing bell. The company currently holds a Zacks Rank #3 (Hold).

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