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Facebook Vice President of Product Chris Cox delivers a keynote address at Facebook's ''fMC'' global event for marketers in New York City in this February 29, 2012, file photo. Facebook Inc said its revenue declined sequentially in the first quarter, the weakest top-line performance by the world's largest social media network since at least 2010.
Credit: Reuters/Mike Segar (UNITED STATES - Tags: BUSINESS)
By Alexei Oreskovic and Alistair Barr
SAN FRANCISCO |
Mon Apr 23, 2012 5:18pm EDT
SAN FRANCISCO (Reuters) - Facebook Inc said its revenue declined sequentially in the first quarter, the weakest top-line performance by the world's largest social media network since at least 2010.
"It was bound to happen. You are going to see a slowdown," said Anupam Palit, an analyst at GreenCrest Capital LLC, noting that it is harder to double revenue when the base is larger.
But he also said Facebook has not worked out how to make more money in some international markets where it is growing the fastest, such as Brazil, India and the Philippines.
"They have not cracked international markets yet, while others like Google do very well internationally," Palit added.
Facebook, which is preparing for an initial public offering that could value it at up to $100 billion, said spending roughly doubled over the past 12 months, outpacing the 45 percent revenue increase during the period.
Net income slid 12 percent to $205 million in the quarter, from $233 million a year earlier at the company, which is aggressively expanding and adding employees.
Facebook said in an updated filing with the U.S. Securities and Exchange Commission on Monday that its advertising business, which accounts for the bulk of its revenue, typically slows down in the first three months of the year. The rapid advertising growth may have "partially masked" such trends to date, and seasonal impacts may be more pronounced in the future, it noted.
Revenue, which totaled $1.06 billion in the three months ended March 31, declined 6 percent from the fourth quarter.
Apart from slowing growth, Facebook is also grappling with other issues. Yahoo Inc is suing it for patent infringement even as the social networking company tries to beef up its intellectual property arsenal. On Monday, it said it would pay $550 million for hundreds of patents from Microsoft Corp.
Facebook also disclosed in the filing that it has agreed to pay Instagram $200 million if the company's recent deal to buy the photo-sharing start-up for $1 billion does not go through.
Facebook said its total number of monthly active users surpassed 900 million in the first quarter.
Facebook added more than 1,000 employees in the year ended in March, taking its headcount to 3,539.
(Reporting By Alistair Barr and Alexei Oreskovic; Editing by Gary Hill and Richard Chang)
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