Last-minute nerves? Wall Street digests dip in Facebook numbers

Facebook gave investors something to ponder ahead of its mid-May IPO, when it filed an amended S-1 to report lower quarterly revenue and net income for the first three months of 2012.

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Where has the money gone? Look under its hood, strip away its go-faster stripes and you see Facebook is becoming a recognisable, maturer online media company, as vulnerable to wider swings as many others.

Facebook, in its defence, explains the period was coming off a Q4 holiday quarter that is always “seasonally strong”. Indeed, it reported poorer advertising sales during the same period last year, too.

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“The rapid growth in our business may have partially masked these seasonal trends to date and the seasonal impacts may be more pronounced in the future,” Facebook warned investors.

Advertising industry folks are used to the reality that ad spending is always highest in the December quarter. Now that Facebook’s growth is slowing, they can begin to see this characteristic in the go-go social network, too.

But this year’s post-holiday drop-off is more pronounced than last and, unlike last year, Facebook Payments revenue from games has also flatlined. That comes mostly from Zynga, which contributed 11 percent of the company’s total sales.

Facebook revenue as a whole is, of course, up year-on-year. But net income slid 12 percent to late-2010 levels $205 million. Facebook blamed it on growing costs of infrastructure, headcount and share payouts.

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Was it bad timing to plan an IPO right after reporting a post-holiday drop-off? At the least, it suggests Facebook is placing confidence in investors to recognise this traditional seasonal movement. But it looks more like the dip wasn’t wholly expected.

Investors must now wonder wonder what the plateau in Facebook’s alternative revenue stream, Payments, indicates, and when the company will start monetising its mobile audience, which grew to 488 million monthly active users in March.

Monthly active network users hit 901 million but their growth slowed from last quarter’s 39 percent year-on-year to 33 percent.

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