Facebook Inc (FB) Will Raise Spending Up Even As Sales Growth Slows

Facebook Inc (NASDAQ:FB) will see its expenses rise sharply as the social networking giant is turning its efforts towards other investments projected to offset slowing sales growth on its main networking site. As early as three months ago, CEO Mark Zuckerberg told investors that Facebook will allocate more spending in areas such as mobile advertising and messaging.

In a report released Wednesday, Facebook Inc (NASDAQ:FB)’s fourth quarter revenue surged 49 percent as against the previous year, beating analysts estimates. But expenses also increased, up 87 percent at $2.72 billion compared to last year, in part due to increases in stock payment to employees. Sales of $3.85 billion reflected a 49 percent growth, down from the 63 percent growth rate reported for the same quarter of 2013. Operating margin is at 29 percent, as against 44 percent the previous year. Net income is at $701 million, or 25 cents per share. On an adjusted basis, net income is 54 cents per share.

Facebook (FB)For 2015, Facebook Inc (NASDAQ:FB) expects spending to range from 55 percent to 70 percent, against the estimate of 50 percent to 75 percent that the company previously announced  in October last year. The expenditures, according to Zuckerberg, will be in web advertising, hiring, messaging, and new technologies. Facebook has recently been looking for talents to rev up its interest in such diverse areas as artificial intelligence, virtual reality, and satellites.

With spending on the rise, analysts are watching closely how Facebook Inc (NASDAQ:FB) will monetize various assets such as Instagram, WhatsApp, and Messenger. As Instagram is rolling out more advertising within the platform, it is expected that Messenger will follow suit. WhatsApp, on the other hand, is expected to maintain its status quo, in keeping with Facebook’s and the app’s founders commitment that user experience will not be interfered with.

This article has been written by Nonito Guntan.

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