Facebook's first public quarter proves solid

Jul 26, 2012 by BARBARA ORTUTAY
This June 20, 2012 photo shows a Facebook login page on a computer screen in Oakland, N.J. Facebook is expected to report their quarterly financial results after the market closes on Thursday, July 26, 2012. (AP Photo/Stace Maude)

(AP) — Facebook's first earnings report as a public company had solid numbers, but in the end it landed with a thud — much like its rocky initial public offering two months ago.

Facebook reported stronger-than-expected revenue and a gain in user numbers Thursday. But investors weren't impressed and after a brief spike, its stock tumbled stock fell nearly 9 percent, or $2.38, to $24.47 in after-hours trading. It had closed down 8.5 percent, or $2.50, at $26.84.

"They didn't break any banks," said Debra Aho Williamson, an analyst at research firm eMarketer. "They did not come out any better than anybody had expected."

Even so, Facebook Inc. said revenue grew 32 percent to $1.18 billion from $895 million a year ago.

Adjusted earnings of $295 million, or 12 cents per share, matched Wall Street's expectations.

Analysts, on average had expected slightly lower revenue of $1.16 billion, according to FactSet.

Facebook said it had 955 million active monthly users as of June 30, up 29 percent from a year earlier.

Overall the Menlo Park, California-based company posted a loss of $157 million, or 8 cents per share in the April-June period, mainly due to compensation expenses it incurred when it gave employees $1.3 billion in restricted stock and related taxes as part of the IPO. The loss compared with earnings of $240 million, or 11 cents per share, in the second quarter a year ago.

The results come two months after Facebook's stock flopped on its first trading day, on May 18. The day began with glitches with the Nasdaq stock market that delayed trading by half an hour. It didn't get much better from there. Despite months of hoopla that had investors thinking it would soar, the stock closed just 23 cents above its $38 IPO price. It has not reached that level since.

Though Facebook had a lot riding on its first public report, Wall Street's outlook was muted, which could be a reason for the stock's decline.

Investors were likely holding out hope that Facebook would far exceed expectations —even though the company effectively warned investors before its IPO that Wall Street's expectations were too high. In a filing issued a week before its IPO, for instance, Facebook said its mobile users are growing at a faster pace than the number of ads on its mobile platform.

Analysts took that as a sign that their estimates were out of whack and many of them reduced their estimates for Facebook's projected revenue and earnings.

That said, Facebook didn't start showing ads on its mobile app until this spring. While it's true that it was late to the game — after all, its mobile user base is growing fast — it doesn't mean it won't be able to grow mobile advertising revenue in the future.

Overall, Facebook said its revenue from advertising totaled $992 million, a 28 percent increase from the same quarter last year. That number accounted for 84 percent of total revenue. The company did not say what portion was from mobile advertising.

The company did not provide an outlook in its earnings press release — another possible reason for investors' disappointment.

Explore further: Ex-Apple chief plans mobile phone for India

2.3 /5 (3 votes)
add to favorites email to friend print save as pdf

Related Stories

Zynga posts 4Q net loss on IPO-related stock costs

Feb 14, 2012

(AP) -- Online game maker Zynga Inc. reported a net loss in the last three months of 2011, weighed by hefty stock-compensation expenses and other costs in its first quarter as a public company.

Qualcomm 3Q results beat Wall Street estimates

Jul 20, 2011

(AP) -- Wireless chip-maker Qualcomm Inc.'s results for the latest quarter beat Wall Street's expectations, and its projections for the current quarter are also above analysts' estimates.

CenturyLink 3Q net income falls as expenses rise

Nov 02, 2011

(AP) -- Phone company CenturyLink Inc. says its third-quarter net income fell as rising operating expenses related to its April acquisition of larger phone company Qwest overshadowed increased revenue.

Recommended for you

Ex-Apple chief plans mobile phone for India

5 hours ago

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

18 hours ago

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

US venture investments highest since 2001 (Update)

Apr 18, 2014

Funding for U.S. startup companies soared 57 percent in the first quarter to a level not seen since 2001, as venture capitalists piled more money into a growing number of deals, according to a report due out Friday.

User comments : 0

More news stories

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

Health care site flagged in Heartbleed review

People with accounts on the enrollment website for President Barack Obama's signature health care law are being told to change their passwords following an administration-wide review of the government's vulnerability to the ...

A homemade solar lamp for developing countries

(Phys.org) —The solar lamp developed by the start-up LEDsafari is a more effective, safer, and less expensive form of illumination than the traditional oil lamp currently used by more than one billion people ...

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...