Facebook freeing 60% more shares seen weighing on its stock

Microsoft, Thiel

Microsoft views Facebook as a strategic partner in the combat against Google, rather than as a near-term moneymaker, said the person, who requested anonymity because the plans are private.

Other investors have been preparing for potential sales. Director Peter Thiel, who sold in the IPO, has given himself added flexibility to unload more holdings, according to a regulatory filing. Thiel, one of Facebook’s earliest investors, converted more than 9 million shares to Class A from Class B. Class A shares are easier to sell on the public markets.

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 second-quarter gain was dwarfed by a surge in spending on marketing and sales, which ballooned to $392 million.

Growing Optimism

Part of Facebook’s challenge is making money from the growing slice of users who access the social network over mobile devices. During the second quarter, the number of ads delivered in the U.S. dropped 2 percent from a year earlier even amid an increase in overall daily users.

Mobile advertising probably contributed just $15 million to second-quarter sales that totaled $1.18 billion, Forte said.

The company has since added a service for software developers, enabling them to entice users to download applications onto mobile devices. The company also said earlier this week that it’s testing a service that lets companies put more ads on mobile phones.

“Despite revenue growth that has decelerated, we see largely organic annual growth of” 25 percent or more through 2014, S&P Capital IQ wrote in a research note. “We have grown more optimistic about the company’s efforts related to monetization and mobile.”

Bloomberg News

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