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Facebook: Spending Like a Drunken Sailor?

NEW YORK (TheStreet) -- Facebook's (FB) fourth-quarter results beat estimates, but Wall Street's concerned the social network is like the rest of America: it might have a spending problem.

Facebook did not provide first-quarter 2013 guidance, but did note that capital expenditures for 2013 will be around $1.8 billion, as the company ramps up its hiring and infrastructure spending. CFO David Ebersman said that total expenses, excluding stock-based compensation, will likely grow around 50% in 2013.

It will be worth watching where the expenses will be in the 2013 calendar year. Ebersman did not note this on the call, but Fusion-IO (FIO), a heavy Facebook and Apple (AAPL) supplier, cut its 2013 revenue outlook as Facebook and Apple delayed orders. "... The change in our guidance reflects a two-quarter shift in the timing of their bulk purchases," Fusion-io CFO Dennis Wolf said in the press release.

Citigroup analyst Neil Doshi downgraded shares to "neutral" on the sharply higher operating expenses, and little, if any, revenue gained from some of the company's newer initiatives. "We view FB as a core long-term 'Net stock. But with plans to invest heavily in the biz in 2013, and little expected contribution from new initiatives like Gifts or Graph Search, we don't see any near-term catalysts for the stock," Doshi wrote in his note.

Doshi also expressed concerns that mobile ads, which monetize at a lower rate than desktop, are cannibalizing desktop ads.

On the conference call, CEO Mark Zuckerberg, COO Sheryl Sandberg, and CFO David Ebersman warned that new initiatives, like Gifts and Graph Search would not lead to material increases in revenue (Graph Search is still in beta), but that over time, these could be big businesses. That's not enough for a stock that's trading at 36 times forward earnings, and has gained over 40% in the past three months.

FB ChartFB data by YCharts

Companies that are in heavy investment mode, a la Facebook, take a longer-term approach to managing the business, and want to see these investments play out over a period of years, not quarter to quarter, as Wall Street so desperately wants. Google (GOOG) experienced this when it was a newly public company, and the story is no different now. Just the names have been replaced.

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