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Facebook drops as Zuckerberg talks a lot on spending, not a word on profit

Facebook shareholders got a sobering reminder on Tuesday…

Facebook drops as Zuckerberg talks a lot on spending, not a word on profit

Facebook shareholders got a sobering reminder on Tuesday: It?s Mark Zuckerberg?s company, and he is determined to spend billions of dollars over the next decade on ventures that might never generate substantial profits.

Facebook reported strong growth in revenue and profit for the third quarter, continuing its recent string of impressive performances.

But in a conference call to discuss the results with investors, Zuckerberg, Facebook?s co-founder and chief executive, focused more on his vision for the company over the next three, five and 10 years.

He talked about his recent $21.8-billion acquisition of WhatsApp and how he wanted to take the mobile messaging app quickly to a billion users from 600 million. (?For us, products really don?t get that interesting to turn into businesses until they have about one billion people using them,? he said.)

Zuckerberg mused about the potential of Oculus VR, the virtual reality company that Facebook bought for $2 billion, which will need ?a bunch of years? to sell enough of its still-unfinished headsets to contribute to Facebook?s bottom line.

And he waxed eloquent about the prospect of bringing people in poor countries like Zambia onto the internet, an almost charitable endeavour that won?t reap financial returns for a long time.

Not once did he utter the word profit.

Zuckerberg has 55% voting control over Facebook, according to the company?s most recent proxy statement. So if investors do not agree with his vision, they don?t have much choice but to sell. And many did, sending the company?s stock down to 8.3% in after-hours trading.

?Wall Street cares about the business model. We care less about changing the world,? said Laura Martin, an analyst with Needham & Company.

Zuckerberg?s emphasis on the company?s long-term plans echoes similar pronouncements from other founder-controlled tech companies like Google and Amazon, which have periodically shocked investors with enormous investments in goofy-sounding projects like self-driving cars and video streaming services.

His comments, along with the disclosure that expenses could rise as much as 75% next year to help carry out that vision, overshadowed what was an otherwise great quarter for the popular US company.

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First published on: 30-10-2014 at 00:01 IST
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