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Facebook posted $1.18 billion in Q2 2012 revenues and a net loss of $157 million (8 cents per share)

Facebook's first financial earnings report since going public in May was pretty good, but failed to impress investors. The social networking giant posted $1.18 billion in Q2 2012 revenues, which was a 32 percent jump from Q2 2011. This figure modestly passed analyst expectations of $1.15 billion in revenues.

However, Facebook did report a net loss of $157 million (8 cents per share), which fell from $240 million (11 cents per share) in Q2 2011. This was likely due to the $1.3 billion the company paid in compensation regarding stock-based pay after the initial public offering (IPO) in May.

After adjusting to figures to exclude those costs, Facebook earned a profit of 12 cents per share, which was right in line with analyst expectations.

Facebook shares are currently down over 12% to $23.45, which is roughly 40 percent below the initial IPO price of $38 per share.

"Our goal is to help every person stay connected and every product they use be a great social experience," said Mark Zuckerberg, Facebook CEO. "That's why we're so focused on investing in our priorities of mobile, platform and social ads to help people have these experiences with their friends."

Facebook CEO Mark Zuckerberg [Image Source: Associated Press]

Facebook's IPO in May was the largest, valuing the social giant at over $100 billion. However, the situation took a dive when shares were trading way below their initial price. In just a two-day span after the company went public, its shares plunged a total of 19 percent.

Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are being sued in a Manhattan federal court by investors who claim that they were lied to about Facebook revenue forecasts before purchasing stock. Other underwriters, like Bank of America Corp. and Barclays PLC, as well as Facebook executives, are being sued as well.

According to reports, underwriters had like Morgan Stanley had selectively shared Facebook estimates, leaving out certain details that would have possibly changed investors' minds. Morgan Stanley reportedly cut its revenue forecasts for Facebook only days before the IPO launched, yet failed to let investors in on the changes. This led to an investigation from the U.S. Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA).

While Facebook may be having some financial issues right now, it's looking ahead to new ventures that could potentially help the company. For instance, it was reported yesterday that a new Facebook phone is expected to launch in mid 2013. However, Facebook CEO Mark Zuckerberg shot down those reports in an ABC News interview.

The goal is to make money on mobile phone advertisements since Facebook had $3.15 billion in total advertising sales last year, but none of this came from ads on mobile devices.

Source: Facebook

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By kleinma on 7/27/2012 12:08:54 PM , Rating: 3
The problem is facebook is run by a guy who is less interested in making money than he is about his product. While I get that, and from the product side of things it is a good thing, it is not so good on the investor side of things. They just want to see profit and growth and profit potential. Facebook is not moving fast enough with respect to those things, and I am already hearing lots of feedback that people are getting tired of facebook. I don't expect it will die off, but it might go the way of myspace faster than anyone thought.

RE: problem
By Dean364 on 7/27/2012 12:32:36 PM , Rating: 2
With a future equally as bright, I've always likened Facebook to AOL.

RE: problem
By kleinma on 7/27/2012 12:55:45 PM , Rating: 2
Yeah AOL was always destined to die, but it would have lasted a lot longer had it not been a dial up service. Once everyone got DSL or Cable, AOL became something that was not needed. Now only old people still use it, and even then they are paying the minimum that has no dial up service.

RE: problem
By toongeorges on 7/27/12, Rating: -1
RE: problem
By kleinma on 7/27/2012 2:55:35 PM , Rating: 3
Do you know how much credibility is lost when you refer to Facebook as Fad boob? Do you also refer to MS as M$?

If you want to make a valid argument, it can be done without dropping to a level that makes you sound ignorant.

RE: problem
By corduroygt on 7/27/2012 1:24:50 PM , Rating: 2
Apple also paid emphasis on its products when SJ was on board but it worked out well for them.

RE: problem
By someguy123 on 7/27/2012 2:30:52 PM , Rating: 3
I don't think that's true at all. He just realizes that, if he were to try conventional monetizing like adspace, another website would pop up offering ad-free and facebook would go the way of myspace.

Facebook is all over the place trying to get partnerships and facebook apps planted, while datamining all of their users as much as possible. Their business model was just never all that profitable to begin with.

RE: problem
By TSS on 7/27/2012 8:26:25 PM , Rating: 2
There's no way having 800+ million users isn't profitable in some way. Maybe the guy just isn't good at making money (for his company that is i'm sure he cashed in big during the IPO. If he didn't, he's stupid).

For instance, What about a partner program a la youtube where people can post their own ads about stuff they happen to like themselves (nothing wrong with advertising a product you actually like, like a trailer for the new batman movie), and share the proceeds 50/50 with facebook. All it requires is an implementation of ads and new ads that people can add to their facebook page at the click of a button (anything else is too inconvenient to bother with since people hate ads. A search -> checkbox -> posted is acceptable).

This would be a win for advertising companies too since you have to either browse or search through ads to find the one you want. You'll be seeing alot of ads during that time.

It should also support companies making good ads because good/funny ones get posted more often and can even go viral.

Just imagine 800 million people posting ads, even just 1 a week. With a much higher rate of people actually watching those ads, because if you're interested enough in a person to follow them on facebook you're interested enough in what products they are interested in. I'm not saying it's not stupid i'm saying it's gotta work.

But then again he might do something silly like force people to post x ads a day. The trick is not to force people and supply good ads. Pretty soon i'm going to look for ways to block youtube ads because they run at 175% the volume of the guy i'm watching (whoever that might be because they are using normal sound levels) and it's getting worse.

I'll tell ya, the world is getting alarmingly stupid when we can't even do the thing we do the most by far, advertising, properly.

RE: problem
By Ammohunt on 7/27/2012 3:45:00 PM , Rating: 2
I know its luster has worn off for me i never found it to be a useful communication medium coupeld with the fact that i am not really interested in the lives of the people i went to high school with 20 years ago. All Facebook is now i a giant shared vanity site and a place to share LOL cats and Jesus loves you images. I have been thinking about bagging it for some time now.

RE: problem
By inperfectdarkness on 7/30/2012 2:38:27 AM , Rating: 2
facebook dying off and becoming another myspace--that would be one of the greatest days of the decade.

i like nothing about zuckerberg. he's like an acne-laden steve jobs.

"Vista runs on Atom ... It's just no one uses it". -- Intel CEO Paul Otellini

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