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Facebook Beats Expert Predictions

Oct 24 2012

Mark Zuckerberg, founder and CEO, shows off th...

Mark Zuckerberg, founder and CEO, shows off the new messaging system in Facebook. (Photo credit: Wikipedia)

Facebook Beats Expert Predictions

Facebook's 2012 third quarter earnings beat Wall Street's expert expectations, ending the quarter at $1.26 billion in revenue. Wall Street financial forecasting experts had predicted Facebook would close the quarter at $1.23 million in earnings. The social network has more than 1 billion members, including 600 million users who access the site through their mobile phones or other handheld digital devices.

Facebook, as the world's second most visited website and the leading social network, has been watched closely because the possibility of high Facebook earnings was seen as a possible boost to the stock market. The company's stock was first offered publicly in May, opening at $38 per share. By the end of the third quarter, this price had fallen to below $20 a share. This led Wall Street to predict lower Facebook earnings - $1.23 billion - than the recently released results show.

Facebook reported only $1.18 billion in earnings in the second quarter of 2012, and $954 million during the third quarter of 2011. This means that the 2012 Q3 Facebook earnings were seven percent above the Q2 earnings and 32 percent above the 2011 Q3 Facebook earnings. The company's earnings per share was $.12, after a Wall Street prediction of $.11 per share.

On a non-GAAP basis, Facebook had a Q3 net income of $372 million, up from $227 million during the same period last year. Looking at GAAP income, which subtracts income taxes and payroll tax adjustments, Facebook lost $59 million during the third quarter of 2012.

The positive financial news from Facebook helped both the company and Wall Street. Facebook stock prices jumped more than 2 percent within ten minutes of the Q3 earnings news. It had also been rising slowly for several days in advance of the announcement, after dropping for several weeks. Just a few minutes after the announcement, the day closed as the stock was trading for $19.53 per share. There were further increases in after-hours trading for Facebook stock.

Facebook CEO Mark Zuckerberg promised further increasing revenues in a public statement released with the financial report. He, along with a large staff of some of the world's most well known application and online platform designers, continue to work toward improving Facebook. According to Zuckerberg the future of Facebook looks positive, with advancements in applications and a focus on mobile users. 

Zuckerberg described the company's 600 million Facebook Mobile users are "more engaged" than those who simply log on from their computer at home or at work, or a public computer. He said the designers and programmers at Facebook at working hard to increase the engagement of these users even further, by introducing new products and improving the Facebook Mobile platform on all mobile operating systems.

Zuckerberg is promising that Facebook's revenue will continue to grow as its membership grows, and those members become more mobile. Many companies have shown it is not that simple in the past, but with 2012 Q3 earnings, Facebook is showing that it is a company with the potential to make that happen.

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