Facebook Warns Of High Costs As Mobile Booms

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Facebook (NasdaqGS: FB - news) has revealed an increase in revenue as the number of users accessing the website from smartphones rockets.

But the social network - which listed in New York last May in a $104bn (£65.7bn) flotation - warned expenses could shoot up by 50% this year.

It comes after costs in the fourth quarter of 2012 jumped 82% to $1.06bn (£670m).

Facebook's profit fell to $64m (£40.5m) - a steep drop from the $302m (£191m) recorded in the same period a year earlier.

But revenue over the period grew by 40% to $1.585bn (£1bn), boosted by mobile advertising revenue which doubled over 90 days.

This now makes up almost a quarter of the company's total advertising revenue, underlining the increasing importance of Facebook's smartphone products.

The eight-year-old company said its mobile users were up almost 60% from a year ago at 680 million, surpassing the number using computers for the first time.

This increase helped drive the number of people who use Facebook on a daily basis to more than 600 million people - a 28% increase from the previous year.

By the end of December, the social network had a total of 1.06 billion monthly users, but it has come under pressure from investors to turn this into a sustainable - and money-making - business.

In September, founder and chief executive Mark Zuckerberg told the TechCrunch Disrupt conference that Facebook was focussed on mobile devices.

"The big thing for us is we have more than a billion people using our product and we need to make Facebook really good across all the devices they use," he said following the results.

But he ruled out the company making its own phone, saying "it is not the right strategy for us."

Mr Zuckerberg, who set up the website while at Harvard University, said Facebook plans to spend heavily to recruit top talent this year.

Expenses could jump 50% in 2013, he warned, with investment expected to climb to as much as $1.8bn (£1.14bn).

"We aren't operating to maximise our profit this year but we're doing what we think will build the best service and business over the long term," he said.

Shares in the company - which have halved in value since its listing in May - fell following the release of the results.

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