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Instant view: Facebook's inaugural results underwhelm, Amazon's outlook weak
July 26, 2012 / 8:56 PM / 5 years ago

Instant view: Facebook's inaugural results underwhelm, Amazon's outlook weak

SAN FRANCISCO (Reuters) - Facebook Inc’s first set of quarterly numbers failed to impress investors hoping for signs that the world’s No. 1 social network can reverse a gradual deceleration in user and revenue growth.

Amazon.com Inc, which also reported results on Thursday, forecast third-quarter revenue that lagged the Street’s projections a tad.

Commentary

Facebook:

HERMAN LEUNG, ANALYST, SUSQUEHANNA FINANCIAL

”Advertising revenue came in a little better than expected.

”Payments were lower, but that’s expected given what happened with Zynga. All in, I thought it was better than feared, but not better than expected.

“There was no guidance provided so the Street was a little irked and annoyed and that’s part of why that stock is trading down.”

BEN SCHACTER, ANALYST, MACQUARIE

“The initial reaction is that the top line is pretty good. I don’t think there’s anything too shocking here. Advertising was good. There’s no guidance here, in the release, so we’re going to have to wait for that.”

MICHAEL MATOUSEK, SENIOR TRADER AT U.S. GLOBAL INVESTORS INC, WHICH MANAGES ABOUT $3 BILLION IN SAN ANTONIO

”They beat, but the Street was looking for more and that’s why I think shares turned lower after an initial bounce.

”The big question with the stock is how it will monetize its billion or so users. A lot of people think they can’t convert those users to money.

“The stock looks weak on a technical basis, and people could step in tomorrow when it breaks under $26, but it doesn’t look good with this new information out there. I don’t want to say the story is broken, but the story is kind of broken.”

DANIEL ERNST, ANALYST, HUDSON SQUARE RESEARCH

”It was an OK quarter. Numbers were beneath most of the Street.

“It was a decent quarter. I think people’s real fear was it would fall off a cliff: it didn‘t. They’ve got a real business there, it’s just not growing as fast as it used to.”

Amazon:

JORDAN ROHAN, ANALYST, STIFEL NICOLAUS

”Profit margins in the second quarter were very, very strong but the company’s guidance implies additional spending in the third quarter. They’re spending aggressively, perhaps on subsidies and advertising related to Kindle products.

“It’s not clear from the numbers that the macro(economy) really affected Amazon. Many people view Amazon as the online version of Walmart, often being the low cost or low price provider of important and necessary goods and services, and it’s that type of retailer will tend to see its business hold up really well in an otherwise relatively tough economic environment.”

KERRY RICE, ANALYST, NEEDHAM & CO

”The bottom line is below consensus but better than what we were expecting certainly; so they ended up coming above. But the real story here is around guidance - it was a little bit light from what people were expecting, and the bottom line much lower than what people would have expected.

”I don’t know that we can say they are investing or spending too much. It’s certainly more than people expected.

“A common theme for Amazon is they’re going to spend to build the infrastructure and capacity to deliver the products and services to the consumer that they feel the consumer wants. As long as they grow in the high 20s to 30-percent range year over year, they will continue to spend like that.”

Reporting By Malathi Nayak, Gerry Shih, Mauro Whiteman and Poornima Gupta in San Francisco

Our Standards:The Thomson Reuters Trust Principles.
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