Facebook Inc (FB) To Continue Aggressive Spending


Facebook Inc (NASDAQ:FB) CEO Mark Zuckerberg stated that he will continue to spend profusely on new technologies in the future, and also explained how this quarter’s numbers was impacted by mega-deals such as the WhatsApp acquisition.

Facebook Inc (FB) To Continue Aggressive Spending

Facebook (FB) viewing long-term goals

Revenue for the company increased 59% to $3.2 billion in the third-quarter, outperforming competitors such as Google Inc. in mobile advertising. However, costs surged 41% during the quarter in which Facebook Inc (NASDAQ:FB) hired approximately 1,200 new employees and major costs were incurred with the acquisition of WhatsApp at $19 billion and the $2 billion purchase of virtual-reality headset maker Oculus Rift.

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While talking to analysts in a conference call, finance chief David Wehner said that he expects Facebook to bear higher expenses than normal in future quarters due to a significant investment in both engineering talent and acquisitions. Wehner is expecting an increase of 75% in the costs for the year.

Wehner along with other Facebook Inc (NASDAQ:FB) executives asked analysts to stay focused on the long-term and not just quarterly financial results. Zuckerberg stressed that the company’s long-term goals run for more than a decade and require aggressive investing. Zuckerberg also talked about virtual reality, artificial intelligence and connecting people from the isolated parts of the world. He added, “Products don’t really get that interesting to turn into businesses until they have about a billion people using them.” Zuckerberg said that the social networking website is working on various services that could reach that threshold in a “five-year time frame.”

Cash-rich firms have similar plans

Facebook Inc (NASDAQ:FB) is not alone in its high-stakes venture. Other cash-rich firms such as Google Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) are also investing aggressively in new acquisitions or research and development to expand their business and diversify to locate new streams of revenue, says a report from the Wall Street Journal. For instance, Google is entering aggressively into smartphone, streaming video devices, eyewear, artificial intelligence and transportation.

The social networking site increased its profit two-fold to a best ever $802 million. Around 66% of its ad revenue now comes from mobile devices, an increase from 62% three months ago and 49% a year earlier.

Following the comments from the CEO, Facebook Inc (NASDAQ:FB) shares dropped around 9.7% in after- hours trading on Tuesday. Year to date, shares of the social networker are up around 50%.

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