Facebook's Ad Sales, Google's Smartphone White Flag, and Taper's Round 2
1. Fed continues its taper in Bernanke's last meeting
That's a wrap. The Fed's epic eight-times-per-year, two-day policy meeting/vacation retreat ended Wednesday. Chairman Ben Bernanke didn't hand out a rose like on The Bachelor (though it would make the central bank more fun), but he did announce more stimulus cuts that rocked Wall Street.
2. Facebook shows off impressive mobile-driven earnings
Facebook's alarming user growth rate (warning: Grandma's cat video is on your news feed) has come to an end. New users grew only 3% from the prior quarter. The good news is that it's matured into a profit power. Sales climbed 63% to $2.3 billion in the fourth quarter, and earnings totaled $523 million. Both crushed Wall Street estimates.
Mobile advertising is climbing as a percentage of total revenues at 53% in the fourth quarter, up from 23% a year ago. It's important, since 77% of users are doing it on their phones. Clearly, Mark Zuckerberg is learning how to occupy smartphone users with annoying Wal-Mart ads on their walls, which is a huge plus for FB shareholders.
Facebook knows you better than your mom does, and they're cashing in on the ad dollars. Because of all-encompassing user-data, FB targets a demographic with razorlike precision, so it's charging top dollar for its ad space. Companies are paying 29% more per FB ad than last year.
It's still growing, too. Facebook's employee headcount grew 33% last year and is poised to grow more in 2014. Look out, Silicon Valley. More Adidas sandals and zip-up hoodies are coming your way. The stock is up 10% on the awesome news.
Do you have a hardware business that stinks? Lenovo is probably willing to buy it off you. The Chinese tech company is binging on American underperforming tech segments. First Lenovo bought IBM's laptops in 2005, then its servers last week, and Wednesday it announced it was buying Google's Motorola phone division for $2.9 billion.
Google makes phones? Yes. You might not have noticed that your Motorola Droid is made by Google , and it has been ever since Big G bought the phone company for $12.5 billion in May 2012. It's selling today because it's a viciously competitive business to make smartphones. And it was ticking off Samsung, too.
Android OS is owned by Google, and it's what most Samsung smartphones run on. The fact that Larry Page's enormous company had its own pet-phone company irritated the biggest phonemaker in the world, Samsung. Maybe this sale gets Google out of Samsung's doghouse.
Motorola was a $9.6 billion loss for Google, according to my Gcalc app. It wasn't a total failure, since it got to gobble up some lawsuit-preventing patents from Motorola's intellectual-property arsenal, but this is a high-profile defeat for GOOG ... and another chapter of Lenovo's journey into American AV clubs.
- U.S. GDP reading
- Weekly jobless claims
- Earnings: Amazon.com, Google, UPS
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The article Facebook's Ad Sales, Google's Smartphone White Flag, and Taper's Round 2 originally appeared on Fool.com.Fool contributors Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Costco Wholesale, Facebook, Google, and UPS and owns shares of Amazon.com, Costco Wholesale, Facebook, Google, and IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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