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Facebook Lays To Rest Old Worries About Mobile Strategy

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Facebook (NASDAQ: FB) has largely laid to rest worries about its strategy for mobile computing that were among investors' biggest worry at its 2012 stock market launch.

For its recent quarter, mobile ad revenue grew 153 percent to $1.66 billion or 62 percent of ad revenue, compared with zero mobile revenue in 2012's second period. Desktop ad revenue for the recent period grew a paltry eight percent in the recent quarter.

Currently, about one billion of the 1.32 billion people using Facebook each month access the service via mobile devices. But in its 2012 prospectus, Facebook warned investors that "we do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven."

Investors worried that Facebook lacked a strategy to exploit the then still-emerging field.

"It's a huge Achilles' heel for them,'' Susan Etlinger, a consultant at the Altimeter Group told the New York Times in 2012. "They don't have a strategy."

Mobile phones' relatively small screens and perceived concerns over privacy were cited as a challenging business proposition for Internet advertising.

Although drawing little comment recently, the shift toward mobile still creates issues for the company. In the recent quarter its price per ad grew 123 percent from a year ago; total ad impressions fell by 25 percent.

"The decrease in ad impressions continues to be driven by the shift towards mobile usage, where people are shown fewer ads compared to desktop" Facebook's Chief Financial Officer Dave Wehner told analysts Wednesday.

Canaccord's Michael Graham said newsfeeds where most mobile ads appear are priced much higher that Facebook's right-hand column ads on desktop.

But ad load on mobile is lighter compared to desktop, Graham said.

Posted-In: Canaccord Dave Wehner Facebook Michael Graham New York TimesAnalyst Color Earnings News


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