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Facebook's earnings playbook

Tuesday, April 30, 2013 - 01:49

April 30 - Facebook has a lot to prove when it releases earnings Wednesday after the bell. Investors are hoping for updates on its new products and for a progress report on its efforts to ramp up mobile ad sales. Bobbi Rebell reports.

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Facebook investors will have only one thing on their mind Wednesday afternoon when it reports earnings: is the company making any real money from mobile? Wedbush Securities Michael Pachter: SOUNDBITE: MICHAEL PACHTER. RESEARCH ANALYST, WEDBUSH SECURITIES (ENGLISH) SAYING: "How much of their revenue comes from mobile? The Street said about 26 percent of advertising revenue from mobile. Again, that sounds reasonable. I think, you know, if it's significantly below that, if it's below 2 percent, I think the market won't like it. But my bias is it probably is 26 percent or higher." Facebook dominates social networks, with 157 million mobile only users. And mobile ads are seen as a key to growth- especially since 84 percent of its revenue comes from ads. But advertisers have their doubts about Facebook. Forrester Research's Nate Elliott: SOUNDBITE: NATE ELLIOTT, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING: "I haven't talked to many marketers who are really thrilled with the money they are spending on Facebook right now. Everyone is scared not to be there, but no one says this is really hitting a home run for them in terms of value and effectiveness. " And a key test for Faceboook will be the progress made with their new mobile "home" apps- to attract and keep users on the site. SOUNDBITE: NATE ELLIOTT, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING: "When the numbers come out, I am going to be looking to see what percentage of their total users are monthly users and what percentage of their monthly users are coming back every day. If both of those numbers look good, if both of those numbers are higher than they were three months ago, or a year ago, then that's a sign that Facebook is at least keeping that billion users it already has very actively engaged. " For the moment, investors appear to be optimistic about the social media company's shares- with options activity indicating a big "like". SOUNDBITE: MICHAEL PACHTER. RESEARCH ANALYST, WEDBUSH SECURITIES (ENGLISH) SAYING: 'I think they will beat by a penny. You know, but I think the revenue will be a little better. Mobile will be a little better. Earnings will be little better and the qualitative comments will be very good. " Expectations are for a 36 percent jump in sales- and earnings of 12 cents per share.

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Facebook's earnings playbook

Tuesday, April 30, 2013 - 01:49