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Facebook is making more money, but spending more, too

There’s good news and bad news from Facebook. Yesterday it reported net income for the first quarter of $219 million.  

A year ago, you wouldn’t see any ads if you logged onto Facebook on your phone. But now, Facebook says 30 percent of its ad revenue comes from ads on mobile devices.

Michael Pachter, an analyst at Wedbush Securities, says Facebook is keeping up with consumers’ move from PC's to mobile devices -- and mobile ads can be targeted. So, if you’re driving past a Starbucks, a coupon might pop up on your phone.

“They can deliver a '50 cents off any latte, only good for next hour' kind of coupon, if you happen to be out in your car between 7 and 10 in the morning," says Pachter.

But Facebook’s revenues only grew 38 percent in the first quarter. While its costs were up 60 percent.

Carl Howe, with the Yankee Group, says Facebook is investing in lots of new projects.

“We get a sense sometimes that they’re just throwing products out the door and seeing what sticks to the wall," Howe says.

Howe adds Facebook founder and CEO Mark Zuckerberg has a soft spot for developers who do cool stuff. Unfortunately, that’s not always profitable. 

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.
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