Wednesday, October 24, 2012

Facebook Inc (NASDAQ:FB) cracks the mobile code, Investors Showing Confidence

After Facebook Inc(NASDAQ:FB) announced its results for its fiscal third quarter, founder and chief executive Mark Zuckerberg declared that he was intent on dispelling the myth that the company cannot make money from mobile users, where more than half of its users reside.

Facebook shares surged the most they had in months after the company disclosed that 14 percent of its $1.09 billion of advertising revenues came from mobile ads.

It caused a pleasant surprise in the Street, which was ready to massacre it, especially after Google's results showed that mobile revenues were slowing.

Facebook, it may be mentioned here, had started its mobile ads campaign as late as April.

The social media network's troubles surfaced after the July quarter results showed that it was facing slowing revenue growth and its lack of penetration in the mobile market was pinned down as the immediate culprit for that.

The company did not provide any guidance nor did it say how exactly it planned to shore up revenues or increase the pace.

Facebook has now proved that it can make money from mobile. The number of people who now access their Facebook pages on phones and tablets surged 61pc to 604m by the end of September. The site had just over 1bn users in total at the end of the third quarter.

While there is no doubt that the company is following a concentrated mobile strategy it is also endeavouring to raise revenues from other sources as well.

Prominent among the new initiatives is Gifts, whereby users can buy gift items from within the site and send them to friends or relatives.

Total revenues, which include money from companies that run applications and games on Facebook, climbed 32pc to $1.26bn in the third quarter. That matched the rate seen in the second quarter and defied fears it would slow.

Shares of FB ended higher by 19.13% to $23.23, off session high of $24.25.

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