Ahead of the Bell: Facebook's earnings showdown

Facebook set to report 2nd-quarter results, first earnings report as a public company

Associated Press

NEW YORK (AP) -- Facebook will take the spotlight Thursday when it reports its first earnings results as a public company after a rocky initial public offering just two months ago.

Impressing investors may be a challenge. Stifel Nicolaus analyst Jordan Rohan said the report is "not likely to inspire." To do that, Facebook will need to show revenue growth above 30 percent, said the analyst. He's expecting revenue to rise 28 percent, to $1.14 billion.

The weak economy in Europe and users' move to mobile devices, where ads are still nascent, are among the difficulties that Facebook faces.

Wednesday's disappointing second-quarter report from Zynga Inc., whose games are played primarily on Facebook's website, does not bode well for the world's biggest online social network. Zynga directly accounted for a significant chunk of Facebook's revenue — about 11 percent in the first quarter, according to regulatory filings.

Indeed, Facebook shares fell $2.05, or 7 percent, to $27.29 in premarket trading Thursday.

Analysts are expecting Facebook Inc. to post earnings of 12 cents per share on revenue of $1.16 billion, according to a poll by FactSet. In all of 2011, it had net income of $1 billion and revenue of $3.71 billion, according to regulatory filings.

Wedbush analyst Michael Pachter thinks it's unlikely that Facebook will miss Wall Street's estimates. He said the banks that led Facebook's IPO likely advised the company to beat expectations for its first public quarter, something that became more achievable once estimates declined.

It's unclear whether Facebook will give guidance for future quarters. If it doesn't, Stifel's Rohan thinks that "may be taken negatively."

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