Facebook reports $701m profit A year

Facebook reported fourth-quarter profits of $701m
(£462m), a 34% increase on the same period a
year ago.
Advertising revenue grew by 53% to $3.59bn, with
nearly 70% of that coming from mobile ad sales.
The social networking giant said it now has 1.39
billion active users each month, a 13% increase
from a year ago.
"We got a lot done in 2014," said Mark Zuckerberg
in a statement accompanying earnings.
Total profits for the year were $2.9bn, almost
double the total for 2013.
However, the amount of profit the company made
on each dollar of revenue decreased from 44% to
29% from a year earlier, as the social network
invested more heavily in marketing and research
and development (R&D).
The amount Facebook is spending on R&D nearly
tripled to $1.1bn this quarter, as the company
spent considerable sums on developing its various
acquisitions such as Instagram, WhatsApp and
virtual-reality headset maker Oculus Rift, as well
as its own in-house messaging products and
video services.
Facebook also echoed a common complaint
amongst US firms this earnings season, saying its
revenue would have increased by 53% instead of
49% were it not for unfavourable foreign exchange
rates.
Analysis: BBC technology reporter Dave Lee
When Facebook first floated on the stock market,
founder Mark Zuckerberg said his firm needed to
figure out how to make money from mobile users -
and quick.
Well, job done. Facebook's mobile ads lack
subtlety, for sure, but the tactic is working, and it
hasn't put users off. Mobile advertising threatened
to be Facebook's Achilles' heel, but now it can be
regarded as its strongest asset.
When Wall Street looks at social network earnings
reports, a massive emphasis is put on growth. If
not enough new people are signing up, the share
price suffers - just ask Twitter.
With big acquisitions - Whatsapp and Instagram -
and its "next billion" targets for the developing
world, Facebook is continuing to grow at a rate
that satisfies shareholders.
So what's next? Last week I visited Facebook's
new London HQ. It was lunchtime, and I saw
several employees spending their break immersed
in Oculus Rift, the virtual reality headset bought by
Facebook last year. It is expected to launch this
year. Mark Zuckerberg has already changed the
way the world interacts once. Can he do it again?