Facebook touts mobile gains as earnings beat forecast

Founder and chief executive Mark Zuckerberg declared it a "myth" that the northern California-based company was not yet able to make money from the turn of users away from computer screens to their smartphones. From virtually nothing earlier this year, he said, mobile was now bringing in 14 percent of advertising revenues for the company. "I want to dispel this myth that Facebook can't make money on mobile," Zuckerberg told analysts in a conference call. "We're just getting started with our mobile product development and monetization," he said. Facebook reported that total revenues, mostly ad-based, had jumped to $1.26 billion in the quarter, 32 percent over a year earlier and 6.7 percent from the previous quarter. The company booked a loss of $59 million, weighed down by accounting rules requiring it to set aside reserves for stock compensation. Excluding those costs, which it said should diminish in 2013, net earnings were a positive $311 million and earnings per share hit 12 cents, one cent above analyst expectations. Facebook shares soared 13 percent to over $22 in after-hours trade as it impressed weary investors in its second-ever quarterly report. After months of doubts over whether the company could make money from its massive network -- it passed the billion-member mark this month -- and user database, the company touted its surge in advertising income. Advertising brought in $1.1 billion in the third quarter, up 36 percent from a year earlier and 11 percent from the prior quarter. The strongest gains came from the mobile sector, the area most challenging to the company as more of its users log in on their cell phones rather than large-screen computers, where ads are more easily displayed. "People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform," said Zuckerberg. "At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company." Facebook went public in May with a resounding flop, its $38 initial public offering price immediately plunging to eventually less than half that. That angered many investors who had built hopes that the company's huge popularity would result in huge gains in the share price. Analysts raised questions about the company's ability to earn money from smartphones, where Facebook is finding its users more often now. The company said some 600 million of its billion users access Facebook on their smartphones. Zuckerberg said the company was focusing its efforts in this area, noting that people who access Facebook on their phone do so more often. "I think our opportunity on mobile is the most misunderstood aspect of Facebook today. Most people underestimate how fundamentally good the trend toward mobile can be for Facebook," he said. He said the company had re-engineered its mobile apps to work faster and was integrating ads into them, rather than placing the ads on the side of computer screens. "On mobile, we believe ads will be more like TV -- high quality and integrated into the experience rather than off to the side." "There's a lot more we can do to help drive deeper mobile engagement as well."