(Adds details from results and background)
Jan 31 (Reuters) - Facebook Inc said on Wednesday that time spent on the social network fell at the end of last year by about 50 million hours a day, even before the company made changes to its flagship News Feed that may further reduce user engagement.
Shares of the company were down 4.1 percent at $179.25 after the bell.
Facebook's 1.40 billion daily active users was up 14 percent from a year earlier, but below analysts' estimate of 1.41 billion for the fourth quarter, according to financial data and analytics firm FactSet. The number of daily users in the United States and Canada actually fell to 184 million from 185 million a quarter earlier.
Chief Executive Mark Zuckerberg said in a statement that the reduction in time spent during the quarter reflected changes to show fewer viral videos "to make sure people's time is well spent."
The 50 million fewer hours per day was compared with the prior quarter and excludes engagement on Facebook's Instagram, Messenger and WhatsApp products, the company said.
"I think that the reduction of 50 million hours per day is spooking investors. That comes out to 2 minutes per day in lower engagement," Wedbush Securities analyst Michael Pachter said.
Facebook, founded in a college dormitory in 2004, has become one of the world's most valuable corporations by selling internet ads that it puts in front of people on Facebook and on its Instagram unit.
Facebook shares were up 43 percent during the past year as of Tuesday's close. The S&P 500 Index rose 24 percent during the same period.
Zuckerberg, though, this month described Facebook as being at a crossroads, as the world's largest social media network seeks to stem the spread of disinformation in elections and in daily life.
Facebook sent a tremor through U.S. politics last year when it said that Russian agents used Facebook to try to sway American voters from 2015 to 2017, an allegation that Moscow denies. Facebook said 126 million Americans may have seen Russian-backed political ads and posts.
Plans to shake up the News Feed, Facebook's centerpiece product, to prioritize posts from friends and tamp down sensational media threaten to cut customer engagement, Zuckerberg has warned.
The News Feed changes came too recently to affect results for the quarter ended Dec. 31. Going forward, though, they could be a positive for the company if Facebook becomes more enjoyable and a better place to advertise, analysts from Deutsche Bank said in a research note on Sunday.
"Users could see brands and advertisements even more closely aligned with their needs and desires at a given time... potentially making for greater ad performance and thus justification for higher prices for Facebook ads," Deutsche Bank said.
Facebook does not give revenue guidance, though it does project expenses and said in November that expenses would likely grow 45 percent to 60 percent during 2018. The spending spree includes new warehouses full of servers and thousands of new workers to review content posted by users.
Net income attributable to Facebook shareholders rose to $4.27 billion, or $1.44 per share, in the fourth quarter ended Dec. 31 from $3.56 billion, or $1.21 per share, a year earlier.
Excluding a tax provision, the company earned $2.21 per share, topping analysts' estimates of $1.95, according to Thomson Reuters I/B/E/S.
Facebook said it increased its provision for 2017 income taxes by $2.27 billion, citing U.S. tax changes.
Total revenue rose 47 percent to $12.97 billion, while full-year revenue was also up 47 percent at $40.65 billion.
Total advertising revenue was $12.78 billion, compared with analysts' estimate of $12.30 billion, according to Thomson Reuters I/B/E/S.
Mobile ad revenue accounted for 89 percent of the total ad sales, up from 84 percent a year earlier.
(Reporting by David Ingram in San Francisco and Aishwarya Venugopal in Bengaluru; Editing by Anil D'Silva and Lisa Shumaker)