:00:18. > :00:21.with Sally Bundock and World Trying to win back friends on Wall
:00:21. > :00:25.Street. But Facebook shares fall despite a 40% jump in revenue Plus
:00:25. > :00:35.- high spirits. Why posh drinks are proving
:00:35. > :00:43.
:00:43. > :00:45.recession proof for distilling Welcome to World Business Report.
:00:45. > :00:48.Since the world's biggest social network floated last year it has
:00:48. > :00:54.been battling to justify its $100 billion valuation, and its shares
:00:54. > :00:57.have lost well over a third of their value. It has more than a
:00:57. > :01:01.billion users worldwide, but can it really turn that popularity into
:01:01. > :01:05.profit? Well, last night its second earnings update since going public
:01:05. > :01:08.began to answer some of those questions. Revenues from
:01:08. > :01:14.advertising jumped by around 40% from a year ago, to almost $1.6
:01:14. > :01:17.billion. More importantly, much more of that revenue came from
:01:17. > :01:23.mobile users, a key concern of investors, as that is the direction
:01:23. > :01:28.the internet is going. But profits plunged some 80% to just $64
:01:28. > :01:32.million. Facebook is having to invest heavily to get that
:01:32. > :01:35.advertising revenue, and that has Wall Street worried. Shares were
:01:35. > :01:45.down as much as 11% in after hours trade before settling down about 3
:01:45. > :01:46.
:01:46. > :01:52.per cent. Here's Michelle Fleury If you were to catch up and your
:01:52. > :01:57.friends latest update, forget your PC. Why reverse I getting Updates
:01:57. > :02:03.on the go on devices like this. The company has been referred to as a
:02:03. > :02:08.mobile company. For the first time in the company's is to be, mobile
:02:08. > :02:15.uses top to face that Mac desktop users. Revenue for the war's
:02:15. > :02:20.largest social media company grew 40%. It is thanks to a strong
:02:20. > :02:30.performance in mobile advertising. Along with a revenue, costs are
:02:30. > :02:31.
:02:31. > :02:40.also rising. We make a decision to continue in 2013. This will cause
:02:40. > :02:45.expenses to grow at a faster rate than we expected. One press in
:02:45. > :02:49.development is something called a graph search. It allows you to
:02:49. > :02:54.search your own network. It was the biggest launch yet as a public
:02:54. > :03:01.company. Investors are unconvinced. Shares remain below the price of
:03:01. > :03:06.the stock market debut. This man believes the concerns are overblown.
:03:06. > :03:10.They are proving their majority. They are steadily growing. They
:03:10. > :03:19.have been answering key questions over whether they wouldn't ever
:03:19. > :03:23.make any money. It is substantial progress. What a boost octet, the
:03:23. > :03:29.reality is that the company is moving forward nicely. -- was ever
:03:29. > :03:38.the stock did. The company is under pressure to make money. The
:03:38. > :03:48.challenge is to make sure that we do not untrained it in the process.
:03:48. > :03:52.
:03:52. > :03:56.We now have more analysis from a technology analyst. I think the PC
:03:56. > :04:02.just ran was right. This is a company that despite what Wall
:04:02. > :04:06.Street may be doing is on the move. They are expanding. I was at the
:04:06. > :04:14.campus last week. I could not many see lots of employees about, but
:04:14. > :04:18.news that a new campus was being built across the street. This is a
:04:18. > :04:26.company that does have a lot of expenses. They are investing long-
:04:26. > :04:33.term. Mark as a Bird sees it as a marathon, not a sprint. He hopes to
:04:33. > :04:38.be able to see significant profits on the way forward. Employees and
:04:38. > :04:45.stockholders will agree. reaction was very short-term in
:04:45. > :04:51.your view? It is not looking at the long picture? I think it was short-
:04:51. > :04:57.term. Facebook has initial expenses. Long-term it has a good outlook. I
:04:57. > :05:00.cannot predict the future. The big question for me is not expenses,
:05:00. > :05:08.but whether what they are selling well be in demand and if people
:05:08. > :05:14.will turn away. They have to keep innovating. They have a lot of work
:05:14. > :05:18.to do. That will cost money. Short- term they may continue to have
:05:18. > :05:24.returns not as profitable as expected. They have to tread
:05:24. > :05:27.carefully. I'm seeing people say that they will leave Facebook
:05:27. > :05:36.because they're worried about what is being done with pictures and
:05:36. > :05:43.information. They have to get that right, don't they? That is right. I
:05:43. > :05:47.work free company which does work with Facebook. We have written
:05:47. > :05:55.about Facebook privacy. It is important. They understand it if
:05:55. > :06:00.information they will turn people away. You say they understand that.
:06:00. > :06:10.They are owned inns to ground. They did it very wrong. They made a
:06:10. > :06:13.
:06:14. > :06:19.mistake. -- Instagram. The company fewer mistakes recen
:06:19. > :06:29.used to. Their chief operating officer has officer hass is
:06:29. > :06:40.
:06:40. > :06:46.an energetic company. Thank you. Global drinks giant Diageo brings
:06:46. > :06:49.out its half-year profits in a few hours' time. Diageo's sales and
:06:49. > :06:52.profits have held up well throughout the past few years of
:06:52. > :06:56.recession and slow economic growth in the West. But a lot now depends
:06:56. > :07:06.on what stake it can gain in the emerging markets of Asia. Jeremy
:07:06. > :07:12.Howell reports. Won an Indian tycoon wanted to sell off a quarter
:07:12. > :07:16.of his company, they leapt on the chance. They have a 40% share of
:07:16. > :07:21.the Indian spirits market. They are now bidding to take a majority
:07:21. > :07:25.stake. Imported spirits are expensive in India. The government
:07:25. > :07:30.puts tariffs of up to three-headed % on them. If these are reduced,
:07:30. > :07:37.the market could boom. A spirits market is important for them. They
:07:37. > :07:44.will have 15% of their operating profit coming from Asia. There is
:07:44. > :07:50.critical. United's spirits would give access to the growing Scotch
:07:50. > :07:55.market. Without the import duties the market in India could be the
:07:55. > :07:58.largest. Drinking spirits is an expensive habit. He would have
:07:58. > :08:05.thought that during recent lean times, the market would have dried
:08:05. > :08:10.out. But this company has been doing quite well. In the US they
:08:10. > :08:15.are increasing sales by an average of 5% a year. Profits are
:08:15. > :08:20.increasing by 7% a year. These are good times to be a spirits producer.
:08:20. > :08:26.They are rapidly becoming the thing to drink. So spirits have been
:08:26. > :08:30.increasing. They are taking market share. There is partly due to young
:08:30. > :08:36.women. Beer drinking more alcohol than prior generations. They are
:08:36. > :08:45.more likely to drink a spirit then a beer. The resource away changing
:08:45. > :08:49.tastes in young men. Eastern markets like China, where the
:08:49. > :08:54.company is seen rapid growth, it could take decades to build up
:08:54. > :09:00.strength in the market. They must make the most of changing tastes in
:09:00. > :09:03.Mantua, Western markets. Particularly in the United States.
:09:03. > :09:06.In other news: Blackberry's long awaited new smartphones have failed
:09:06. > :09:09.to please investors. Shares fell some 12% yesterday after the
:09:09. > :09:14.company launched two handsets powered by the new Blackberry 10
:09:14. > :09:24.operating system. There's a lot riding on them - analysts warn they
:09:24. > :09:25.
:09:25. > :09:28.could be the company's last chance to catch up with Apple and Samsung.
:09:28. > :09:32.Most people expected the US economy to slow over the last three months.
:09:32. > :09:35.No one thought it would actually shrink, but it did. By 0.1%. The
:09:35. > :09:45.first contraction since 2009. The fall in output was blamed, in part,
:09:45. > :09:45.