Facebook Profit Tumble (WHY Socialising Aint Free)

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Socialising don’t come for free: The Social Network is feeling the pinch after costs soar and its $1bn payout to Instagram.

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Running a social network is no laughing matter.

Facebook net profit fell 12% as costs doubled in its recent quarter, according to its latest regulatory filing.

Net profit at Mark Zuckerberg’s brainchild fell to US$205m – although sales rose a steady 45% to $106 billion in the first three months to March 2012, the filing to the US Securities and Exchange Commission shows.

However, Facebook’s sales growth is losing some momentum – slowing from the 55% growth enjoyed the previous quarter, according to Bloomberg.

Facebook’s costs rose to $677m as it launches new ad services and features to keep growth momentum of its user base which has swelled again to 901 million – that a whopping 56m rise since December.

And with an astonishing 901m users – 526 million of which are ‘daily active users’ – up from 483 m in December – every Facebooker is worth $1.61 in revenue to Zuckerberg’s network – a 6% rise on previous figure.

82% of its revenue came from advertising, which has been beefed up considerably in the past year, the filing also show.

Facebook recognised the rapid rising costs as part of its filing, and predicts expenses will shoot up further as it looks to broaden its users base and platform.

“Our costs are growing quickly, which could harm our business and profitability,” Facebook admit in a statement accompanying the filing.

“Providing our products to our users is costly and we expect our expenses to continue to increase in the future as we broaden our user base, as users increase the number of connections and amount of data they share with us, as we develop and implement new product features that require more computing infrastructure, and as we hire additional employees.”

Facebook has taken on over 500 additional staff since December, which now stands at 3,539.

And between acquisitions, swelling staff and an impending IPO, it is looking like the youthful start up is maturing fast – it also forked out $550 million to Microsoft for a patents cache, which could see off a recent infringement claims by struggling web engine Yahoo!

 

This news comes as it prepares for its IPO which looks set to make up to $10 billion for Zuckerberg’s coffers.

And more deatils have also emerged about Facebook pricey acquition of image gurus Instagram and how it funded the deal announced earlier this month – it paid for the acquisition with 23 million shares and $300 million in cash.

And Zuckerberg also agreeded $200m to Instagram owners if the controversial deal does not go ahead.

 

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