Facebook profits drop sharply

Facebook has reported a sharp drop in profits, partly due to increased spending on research and development.

Facebook made a profit of $64 million in the final three months of 2012, compared with $302 million a year earlier.

Revenue was up 40% at $1.6 billion, largely due to a big jump in advertising revenue, a quarter of which came from mobile platforms.

Shares in Facebook fell by almost 6% in after-hours trading in New York.

The shares launched on the Nasdaq stock exchange in May at $38, and had halved in value by September.

They have since recovered to stand at $31 at the close of trading on Wednesday. The drop in after-hours trading suggests the shares will fall back again when full trading resumes on Thursday.

“Mobile revenue was expected to be a little higher,” said analyst Aaron Kessler at Raymond James.

“Overall it’s a solid quarter but maybe [the company has suffered from] high expectations going into the quarter.”

Revenue from advertising was $1.3 billion, 41% up on a year earlier.

Mobile revenue, an important indicator of the company’s ability to capitalize on the growing move towards mobile platforms, accounted for 23% of overall revenue.

“In 2012, we connected over a billion people and became a mobile company,” said Mark Zuckerberg, Facebook founder and chief executive.

“We enter 2013 with good momentum and will continue to invest to achieve our mission and become a stronger, more valuable company.”