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Market Update

Earnings on Tap: Facebook

New applications might not be enough for the social-networking firm to monetize its expanding mobile user base.

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Social-networking site  Facebook (FB) will be reporting first-quarter results after the markets close Wednesday. Wall Street analysts are expecting earnings to come in at $0.08 per share compared with $0.09 per diluted share reported in the corresponding quarter a year ago.

Facebook reported strong performance in the fourth quarter of the previous fiscal year with revenues up 40% at $1.59 billion. Net income, however, came in lower at $64 million, or $0.03 per share. The company has been concentrating on mobile services for future revenue growth. Mobile revenue represented approximately 23% of advertising revenue for the fourth quarter of 2012, up from approximately 14% of ad revenue in the third quarter of the same year.

Facebook's earnings call will also shed some light as to how well the company has been able to monetize its expanding mobile user base. 

Morningstar analyst Rick Summer says even though the launch of Facebook Home is a positive signal for the company, he is skeptical that the application will be adopted by a large percentage of the company's 600 million monthly mobile users.

Facebook shares are up 4.3% on a year-to-date basis and are trading near Summer's fair value estimate.

 

Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.