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Facebook Profits Decline in First Quarter

Total revenues rose 44.7 percent to $1.06 billion from $731 million, a substantial majority of which is from advertising.

FACEBOOK PROFITS DECLINE: Facebook Inc., which plans to raise more than $5 billion in an initial public offering next month, said net income for the first quarter ended March 31 fell 12 percent to $205 million, or 9 cents a diluted share, from $233 million, or 11 cents, a year ago. Part of the decline was due to a more than doubling of marketing and sales expenses to $159 million from $68 million in 2010, as well as higher costs for research and development at $153 million from $57 million. Total revenues rose 44.7 percent to $1.06 billion from $731 million.

The company said a substantial majority of its revenue is from advertising, with it accounting for 82 percent of total revenues in the quarter just ended. The filing mentioned a recent Procter & Gamble advertisement to generate awareness for Secret deodorant’s “Mean Stinks” program to a select group of female Facebook users. Facebook said in the 26 weeks after the campaign launched, “Secret experienced a 9 percent increase in U.S. sales and an increase in engagement with its Facebook page.”

This story first appeared in the April 24, 2012 issue of WWD.  Subscribe Today.

With 901 million monthly active users, 526 million active daily users, 3.2 billion “likes” and comments per day and 125 billion friendships as of March 31, Facebook said it has a higher accuracy rate than other online industry averages.

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