Facebook's first earnings report: mediocre results, new low for stock price

On Thursday, Facebook had its first-ever earnings report as a publicly-traded company. Facebook announced a $157-million loss, and although its revenue beat Wall Street's expectations, it still hasn't figured out how to translate users into profits.

Facebook's finances have been in the news quite a bit lately. In May the social-networking behemoth made its initial public offering, selling shares at $38 each -- one of the largest technology IPOs in history. Then the stock declined steeply, losing about a third of its value over the next few months, and pundits wondered whether Facebook really had a strategy to turn a profit after all.

But on Thursday Facebook had its first-ever earnings report as a publicly-traded company, and we got a clearer picture of how profitable the company really is.

The results were disappointing, but not disastrous. Facebook announced a loss of $157 million, compared to $240 million in income over the same quarter last year. The company blamed the loss on expenses it incurred after its IPO, including $1.3 billion in share compensation and payroll taxes. On the other hand, though, it reported that its revenue, fueled mostly by advertising, had climbed 32 percent, from $885 million to $1.18 billion, beating Wall Street's expectations.

Facebook's stock prices slumped a bit following Thursday's announcement, trading around $22 Friday morning. To put things in context, analysts say they aren't expecting the company to come roaring out of the gate, but one thing's fairly clear: Mark Zuckerberg and his crew will need to figure out in the next few months how to translate their growing user base into growing profits.

Incidentally, that user growth is apparently continuing apace. Facebook now has 552 million active users a day, on average, and 955 million active users a month. That latter group includes 543 million active mobile users -- more than half the site's total, and a 67 percent increase over last year.

One important number Facebook didn't provide in the earnings report, though, was how much of its advertising revenue is coming from the site's mobile platform. Right now, figuring out how to make money from traffic on mobile devices is considered the company's biggest hurdle to profitability.

One last tidbit we learned from the earnings report: the oft-rumored "Facebook phone," a handset built and branded by Facebook, probably isn't happening anytime soon. Zuckerberg mentioned to reporters that "building our own phone won't make much sense for us," suggesting that the company expects to make its money through apps, not through hardware. That said, Facebook's mobile app has continued to be hugely popular with both iOS and Android users, and as far as a Facebook-branded handset – well, there's always the HTC Status.

Readers, what's your reaction to the company's first-quarter results? Are you optimistic about Facebook's profitability? Share your thoughts in the comments section below.

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