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Tuesday, November 13, 2012

$FB (MarketWatch) Rising revenue won’t flow to bottom line

$FB (MarketWatch) Rising revenue won’t flow to bottom line

"That in turn will make its shares less attractive during that time to fund managers and other professional stock buyers who look for value as well as growth when choosing stocks.
Facebook’s massive stock-compensation bill shows the cost to common shareholders of the company’s generosity in handing out equity to employees, executives and early investors. Any net income Facebook might have generated in the near future already has been given away in advance, in the form of free equity, to these insiders.
Because new stock-compensation charges and related taxes will be incurred on Jan. 1, adding to the existing total, Facebook’s per-share earnings may continue to be wiped out by these costs beyond next year.
Facebook’s third-quarter results provided a snapshot of this effect, as those insiders who were free to sell their shares did so in large numbers, generating huge expenses for the company."

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