Facebook reported for the first time declining revenues for the first quarter of this year. The signal of slowing down the explosive growth enjoyed by the largest social network in the world comes just a few weeks before the largest IPO in the IT industry. The company said that the lower revenue was caused by seasonal trends in advertising, writes Reuters. Some analysts on Wall Street did not expect a decline in revenue. “It was a slowdown faster than we expected. No matter how you look at the problem: a steep decline will be cause for concern for investors in a company perceived to be increasing rapidly, looking for a high value on the market”, commented Brian Wieser, an analyst at Pivotal Research Group.
Facebook wants to raise about $5 billion through its IPO (Initial Public Offering), setting up the largest IPO ever conducted in the IT industry, which would ensure a market capitalization of up to 100 billion dollars. Analysts say investors will fight for Facebook shares in the IPO, but the negative signs of slowdown might cause some to not become long term shareholders. Facebook, founded in 2004 by Mark Zuckerberg, in the first quarter exceeded for the first time the threshold of 900 million monthly active users. The company hired 1,100 people in the last 12 months, the total number of employees reaching 3,539, according to reports filed late Monday with the U.S. Securities Commission.
Costs have doubled in the last 12 months, while revenue climbed by only 45%, the company said. Net profit fell 12% in the first quarter, to 205 million dollars from 233 million in the corresponding period last year. Revenues totaled U.S. $ 1.06 billion, down 6% from the fourth quarter. Besides growth slowing down, Facebook has problems with intellectual property rights and patents. Yahoo sued Facebook for patents violation, while the social network tries to enhance its portfolio of intellectual property rights to prevent future clashes in court. Facebook announced Monday that it would pay 550 million dollars to Microsoft for a portfolio of several hundred patents.
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