What's on our mind: Facebook earnings

Facebook shares are down nearly 2.5 percent ahead of its first-quarter earnings report this afternoon. Here’s a look at some of the things investors and analysts are watching for.

First: Ads, ads, ads. Internet companies including Facebook have pledged allegiance to mobile. The company said in January when it released its fourth-quarter earnings that more than half of its ad revenue now comes from mobile. Facebook’s status update regarding the performance of its mobile ads this time around will be key, especially in light of Google’s earnings last week. Brandon Bailey wrote that although Google ad sales continue to rise, its average ad prices have fallen because advertisers are wary of the value of mobile ads.

But there are signs that Facebook might have an antidote to the problem Google’s facing. Facebook is expected to unveil a mobile-ad network next week, one that could become quite profitable because Facebook has lots of what third-party advertisers want: data and reach.

Also, Wall Street is quite excited about video ads‘ money-making potential.

Then there’s the social network’s shopping spree in the past couple of months — and it’s doesn’t clip coupons, either. It bought messaging app WhatsApp for $19 billion, and virtual-reality startup Oculus VR for $2 billion. CEO Mark Zuckerberg has said time and again that he thinks long term. But we’re guessing investors are wondering when/if these big purchases will pay off. There are also concerns about how WhatsApp will fit with Facebook’s messaging strategy (it has its own Messenger), and curiosity and concern over venturing into the world of virtual reality.

And speaking of purchases, there’s Instagram,  the photo-sharing network Facebook bought a couple of years ago for a cool $1 billion. It recently began to show ads. What’s its financial snapshot?

Analysts expect Facebook to post earnings of 24 cents a share on revenue of $2.36 billion, according to a survey by FactSet.

 

Photo from Reuters archives

Levi Sumagaysay Levi Sumagaysay (4032 Posts)

Levi Sumagaysay is editor of the combined SiliconBeat and Good Morning Silicon Valley. She also helps take care of SiliconValley.com, the Mercury News tech website. Email: lsumagaysay (at) bayareanewsgroup (dot-com).