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EARNINGS ROUND-UP: FACEBOOK, SAMSUNG

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EARNINGS ROUND-UP: FACEBOOK, SAMSUNG

Jan 29 2015, 9.45am GMT

STOCK.com

Facebook and Samsung both released earnings overnight; today investors see the affects.

FACEBOOK

Whilst earnings were positive for Facebook, shares still saw only small initial rises to $77.43 before a decrease to 75.91. The main highlights of the Facebook report were the huge increases in users and revenue. However, expenses were also high. So, as total profits nearly doubled from 2013 to $2.9bn, the amount spent on research and development nearly tripled to $1.1bn this quarter. This brings the amount of profit made on each dollar of revenue decrease from 44% to 29% from a year earlier. A large complaint that has been echoed throughout the U.S business world is the negative effect of the strong USD, with Facebook remarking that total revenue would have reached 53% instead of 49%, and revenue from advertising alone would have achieved 58% rather than 53% if not for the negative foreign exchange rates that exist.

The original forecast for Facebook was $3.77 billion for revenue and earnings and $0.48 per share. Actual revenue reached $3.85 billion and $0.54 per share.

Fourth Quarter 2014 Financial Highlights

  • Revenue totaled $3.85 billion, an increase of 49%, compared with $2.59 billion in the fourth quarter of 2013.
  • Revenue from advertising was $3.59 billion, a 53% increase from the same quarter last year.
  • Mobile advertising revenue represented approximately 69% of advertising revenue, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
  • Payments and other fees revenue was $257 million, a 7% increase from the same quarter last year.

Full Year 2014 Business Highlights

  • Revenue for the full year 2014 was $12.47 billion, an increase of 58% year-over-year.
  • Income from operations for the full year 2014 was $4.99 billion.
  • Net income for the full year 2014 was $2.94 billion.
  • Free cash flow for the full year 2014 was $3.63 billion.
  • Daily active users (DAUs) were 890 million on average for December 2014, an increase of 18% year-over-year.
  • Mobile DAUs were 745 million on average for December 2014, an increase of 34% year-over-year.
  • Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.
  • Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.

"We got a lot done in 2014. Our community continues to grow and we're making progress towards connecting the world," said Mark Zuckerberg, Facebook founder and CEO. To summarize, Instagram rolled out autoplay video ads from Disney, ad serving platform Atlas was launched, issues over duplicate accounts were resolved, and now Facebook are looking into a new initiative linking patients with health complaints on the network, which will lead to new advertising revenue alongside discussions to cement plans on monetization of WhatsApp and Facebook Messenger.

MT4 chart: FACEBOOK

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SAMSUNG

The battle of the mobile-makers continues but with Samsung taking a beating against Apple this quarter. Whilst Apple reported record-breaking sales of iPhones, Samsung’s revenue fell for a fifth year contracting 21% on mobile revenue. Interestingly, the FT reports that peace talks between the two smartphone rivals may be in process: “While the company has not confirmed it, analysts believe that Samsung has won a contract to produce processors for Apple’s next iPhone model.”

South Korea is reputed to have the lowest dividend payout ratios in Asia, therefore Samsung’s announcement that despite low earnings, the company will increase its full-year dividend 41% to Won19,500 per share, may interest new investors. Alongside the production of an unnamed “customer’s new set product”, Samsung are also predicting new sales from its own new products such as the Galaxy A range of phones by hitting the low and mid-end market not saturated by Apple and cheap Chinese products.

Samsung earnings highlights:

  • Revenue for mobile business was Won25tn in the final quarter, down 23% from a year before.
  • For the full year, mobile revenue was down 21%, reversing several years of double-digit sales increases.
  • Operating profit in the IT and mobile division was down by 64% for the quarter.
  • Samsung’s main profit driving segment, the semiconductor unit, recorded fourth-quarter sales up by 2% and operating profit increases of 26%.
  • Sales fell 11% year-on-year to Won52.7tn ($48.5bn) in the last quarter, while operating profit was down 36% to Won5.3tn.

MT4 chart: SAMSUNG - shares fall to 614.5

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