Facebook 2012 Sales Outlook Cut by $1.1 Billion at EMarketer - San Francisco Chronicle

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(Updates with shares in last paragraph.)

Aug. 30 (Bloomberg) -- Facebook Inc. may post $5.04 billion in sales this year, EMarketer Inc. estimated, down from the market researcher’s earlier projection for $6.1 billion as the biggest social network struggles to sustain advertising growth.

EMarketer, which made its earlier prediction in February, now expects revenue to rise 36 percent in 2012 and 31 percent in 2013, compared with an 88 percent gain last year. Growth in advertising, which makes up the majority of Facebook’s sales, will slow to 34 percent in 2012 and 29 percent in 2013, compared with more than 68 percent last year, EMarketer said.

Facebook is grappling with questions from marketers about how well ads on its site are performing, said Debra Aho Williamson, an EMarketer analyst. While Facebook says it is working with companies to show that the ads have an impact with its 955 million users, the social network must move more quickly, she said.

Sales “haven’t been growing as fast as we and others had expected,” Williamson said. “There is still hesitation about the effectiveness of the advertising, about how much the advertising is worth.”

Still, revenue growth is seen “stabilizing” in 2013, she said. The company will get help next year from newer initiatives, including ads tied to searches and the Facebook Exchange, which lets advertisers reach specific types of users on the site based on their browsing history.

New mobile-ad services also should make a bigger impact next year as well, she said. These services weren’t a big part of the forecast for 2012 before the revision.

Slowing Growth

EMarketer’s new sales projection for Facebook this year is slightly more than the $4.92 billion average estimate from analysts, according to data compiled by Bloomberg.

Facebook has grappled with concerns about its valuation after reporting sales growth of 32 percent in the second quarter from the year-ago period, down from 45 percent in the first quarter and 55 percent in the fourth quarter.

The stock has lost about half its value since Facebook sold shares at $38 apiece in an initial public offering on May 17. Facebook, based in Menlo Park, California, rose less than 1 percent to $19.13 at 2:36 p.m. in New York.

--Editors: Jillian Ward, Lisa Rapaport

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net