Facebook hopes investors like first earnings

Facebook reports its first earnings as a public company on Thursday in an announcement that will be closely watched for signs of whether the social media giant can deliver on its financial promise.

The earnings figures could serve as redemption, or lead to further market punishment for the social network.

Facebook shares have been in a funk since their much-hyped May 18 debut was plagued by technical glitches and complaints that key forecasts were kept from the public in what was the largest initial public offering for a tech firm.

Shares have fallen steadily since the IPO and closed Wednesday at $29.34 -- some 20 percent below the offering price of $38.

Analysts expect Facebook to show a profit of 12 cents per share on revenues of $1.15 billion in the quarter.

Some analysts still like Facebook, saying the world's biggest social network will find a way to leverage its user base of more than 900 million to sell advertising and generate other revenues.

But others see challenges ahead.

Citi analyst Mark Mahaney said his outlook for Facebook was "relatively negative" with revenue growth decelerating to 25 percent amid weakness in display advertising and a shift to the mobile Internet, where Facebook gets little money.

"Facebook has established itself as an Internet utility," Mahaney said in a note to clients.

"It could become the largest Net platform one day in terms of revenue and profits" but that at current share values, "much of this potential has been priced in."

"Super-high valuation multiples and decelerating growth don't mix well," he said. "Add a limited visibility biz model and an unproven management team, and you have a neutral" rating.

But Arvind Bhatia at Sterne Agee rates Facebook a "buy" and sees "upside potential" for the rest of the year.

"We believe monetization could improve meaningfully through greater adoption of premium ads and sponsored stories, especially their use in News Feeds," he said in a research note.

Victor Anthony at Topeka Capital Markets also rates Facebook a "buy" but is downgrading some estimates for its growth.

"We are tweaking estimates to reflect the impact of exchange rates and the worsening economic climate in Europe, where Facebook generates nearly 40 percent of its revenues," he said.

Concern about social media was fueled by a weak earnings report Wednesday from Zynga -- a games maker whose fortunes are tied in many respects to Facebook.

Zynga shares plunged more than a third in after-hours trade as the online social games maker badly missed earnings expectations.

Shares slid 38 percent to $3.16 in reaction to the news of a $22 million loss for the company, which went public last year at $10 a share. The negative sentiment spilled over to Facebook, which fell eight percent after hours.

The net loss for the second quarter amounted to three cents a share. Adjusted for special items Zynga showed a profit of one cent per share, far below Wall Street expectations of six cents.

A huge electronic foul-up marred the $16 billion Facebook share issue, the most hotly awaited initial public offering on the US markets in years, on May 18.

The Nasdaq last week raised to $62 million the amount of money it will set aside to cover trading losses due to computer glitches such as those which disrupted the Facebook launch.

Facebook's IPO overwhelmed Nasdaq's systems when it hit the market, forcing a half-hour delay in opening trading and leaving investors and brokers in the dark for hours over the results of orders involving millions of shares.

Claims of losses related to the market's computer problems are estimated above $100 million, according to The Wall Street Journal.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Developers prepare for new rules and regulations
    Developers prepare for new rules and regulations

    Known as the "Subdivision and Condominium Buyers' Protective Decree," Presidential Decree No. 957 issued two sets of revised implementing rules and regulations (IRRs) earlier in 2015. A bill initiated by former President Ferdinand Marcos in 1976, the decree and its most recent amendments were designed to "protect buyers from fraudulent and unscrupulous subdivision and condominium sellers, operators and developers," according to the explanatory note that accompanied the bill in its senate …

  • ‘Get SAF 44 killers before BBL passage’
    ‘Get SAF 44 killers before BBL passage’

    Lawmakers are demanding the arrest of the Moro Islamic Liberation Front (MILF) fighters involved in the killing of 44 policemen in Mamasapano before the approval of the proposed Bangsamoro Basic Law (BBL) in Congress. Cagayan de Oro Rep. Rufus Rodriguez, chairman of the 75-member ad hoc committee in the House of Representatives deliberating on the BBL, prodded the Department of Justice (DOJ) to speed up its investigation and file charges against the MILF guerrillas as the Aquino administration …

  • Pinoys dance for Earth Hour
    Pinoys dance for Earth Hour

    The Philippines once again displayed its support Saturday night for the worldwide observance of Earth Hour by hosting a dance party after turning the lights off from 8:30 to 9:30 p.m. to save energy and make a statement on various environmental issues. The World Wide Fund for Nature (WWF) said widespread participation proved anew that no individual action on climate change is too small and that no collective vision is too big with celebrations in over 7,000 hubs in 170 countries. The WWF said …

  • Phl offers Sabah to win Malaysia’s support for UN case vs China
    Phl offers Sabah to win Malaysia’s support for UN case vs China

    The Philippines has offered to downgrade its claim on Sabah in exchange for Malaysia’s support for its case against China before the United Nations. The quid pro quo was contained in a note verbale the Department of Foreign Affairs (DFA) handed to a representative of the Malaysian embassy last week, a week after the visit of Malaysian Defense Minister Dato  Seri Hishammuddin Tun Hussein. The note verbale, a copy of which was obtained by VERA Files, referred to the May 6, 2009 joint submission …

  • Maysak to enter Phl Wednesday
    Maysak to enter Phl Wednesday

    A typhoon with international name Maysak is expected to enter the Philippine area of responsibility (PAR) on Wednesday and bring rains over Northern Luzon by weekend, the state weather bureau said yesterday. Aldczar Aurelio, weather forecaster of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), said the typhoon was 2,810 kilometers east of Mindanao as of 10 a.m. yesterday. “This typhoon is still too far to affect any part of the country,” the weather …

  • Nonviolent disciplining of kids pushed

    Child rights advocates called on senators to pass and strongly endorse a law that will institutionalize positive and nonviolent methods of disciplining children.The Child Rights Network (CRN), Plan International Philippines (PIP), Philippine Legislators’ Committee on Population and Development (PLPCD), and Lihok Pilipinas Foundation led the call for the enactment of the Positive Discipline Bill.Several Quezon City Council members led by Majority Floor Leader Jesus Manuel Suntay, Victor Ferrer …

  • Method to their madness

    [caption id="attachment_256768" align="alignright" width="212"] Illustration by Rod Cañalita[/caption] EMMANUEL PORTUGAL Country Manager for the Philippines, VMware I look after the garden. I’d like to think that I have a green thumb—no plants have died so far! The ones I like now that I planted a few months ago is the Blue Iris. Like the town in the movie, my Blue Iris shows up in the morning and only appears for one day. …

  • JGFP Summer Tour on today

    The summer tour for local junior golfers kicks off with the holding of the ICTSI-JGFP Baguio Junior Open today and tomorrow at the treacherous Baguio Country Club course in Baguio.Sixty players aged 6 to 17 years old are entered in the 36-hole tourney serving as the opening leg of the summer circuit organized by the Junior Golf Foundation of the Philippines with the International Container Terminal Services, Inc. Foundation as main sponsor. ... …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options