Connect to share and comment

Facebook earnings and revenues slide ahead of IPO

In a sign that Facebook’s growth may be slowing ahead of an anticipated $100 billion IPO, the social network reported Monday that its earnings and revenues fell in the first quarter of 2012.

Facebook ibm patents 2012 03 23Enlarge
On February 1 Facebook announced it was seeking to raise $5 billion in funds through an initial public offering. (Justin Sullivan/Getty Images)

Facebook’s earnings and revenues fell in the first quarter of 2012, the social network said in a regulatory filing Monday, indicating that the firm’s growth may be slowing ahead of an anticipated $100 billion initial public offering (IPO).

The California-based company’s revenue for the first three months of this year was $1.06 billion, down 6 percent from the final quarter of 2011, Reuters reports.

Profit during the quarter dropped 12 percent to $205 million from $233 million a year earlier, as the company amps up spending ahead of its IPO and costs, sales and marketing expenses soared.

Facebook blamed the slip on “seasonal trends,” as advertisers spent less in the first quarter compared with the final three months of last year.

More from GlobalPost: Facebook IPO - five things you should know

The company is preparing to raise at least $5 billion in the biggest ever Internet offering. Its expenses are rising, as it constructs data centers and takes on engineers to run a network for its more than 900 million users around the world, The Wall Street Journal reports.

More from GlobalPost: Facebook buys 750 patents from IBM to build defense against Yahoo!

On Monday, Facebook also agreed to pay Microsoft $550 million for hundreds of patents that the software giant just bought from AOL, in order to bolster its defences as an ongoing patent lawsuit with Yahoo! grows ever more bitter.

Analyst and chief executive of PrivCo Sam Hamadeh told The Guardian that Facebook’s latest profit figures were a "disaster".

"This company has done everything it can to have a blowout in the first quarter. This is absolutely not what they wanted," Hamadeh said, pointing out that Facebook had boosted the number of ads users see, introduced its fresh timeline approach and made several other attempts to increase profits ahead of the IPO.

"You have to ask: has this company peaked?" he said. "We often say that companies go public too early. Could this one be too late?"

More from GlobalPost: Your body parts, made to order

http://www.globalpost.com/dispatch/news/business/120424/facebook-earnings-and-revenues-slide-ahead-ipo