Facebook Earnings Preview: It's All About Mobile, User Engagment

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Facebook (FB) may soon find out how many friends it has on Wall Street.

The social networking giant reports first quarter earnings after today's closing bell and it's likely to show strong growth in several key areas.

Mark Zuckerberg, chief executive officer and founder of Facebook Inc.
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Its profit is expected to be pretty much flat with a year ago, as the company continues to spend heavily on a new data facility, new products and features, and new employees. So investors are focused on revenue growth.

The consensus of analysts surveyed by FactSet calls for revenue to jump 36 percent to more than $1.4 billion dollars.

And it's not just revenue that will be of interest, but where that revenue is coming from. Because more and more users are accessing Facebook through smartphones and tablets, the key metric in today's report could be revenue from mobile advertising.

A year ago, mobile revenue was barely a factor. But now it's all about mobile. Revenue in that category topped $300 million in the fourth quarter, and analysts are forecasting significant growth from that level: Last month the company introduced Facebook Home, the new software that puts the social-networking site front and center for some Android-based phones.

Another key measure to watch in today's report is the number of active daily users. There's been some worry that Facebook has lost some of its 'cool' factor -- that users are becoming bored and not visiting the site quite as often, and not spending as much time on it as they used to.

It was just about a year ago that Facebook launched its disastrous IPO, which was plagued by a major technical snafu at the Nasdaq. The stock plunged in value.

In the first few months of trading, Facebook tumbled from an initial price of $38 a share to as low as $17. Right now it's trading above $27, after gaining ground for the past eight days.

The price to earnings ratio on the stock is astronomical, but some analysts say the stock does offer opportunities for investors who can tolerate a lot of risk. They note that Facebook is still a very young company, with $1.1 billion users and lots of potential.

–Produced by Drew Trachtenberg

8 PHOTOS
Introducing Facebook's Home
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Facebook Earnings Preview: It's All About Mobile, User Engagment

On April 4, 2013 Home was introduced as the next version of Facebook.

Home turns an Android phone into a more manageable social experience, rather than a collection of separate apps that can be tedious to navigate through.

Home will be available free from the Google Play Store starting April 12 and will also be pre-installed on phones through the Facebook Home Program.

"From the moment you wake up your phone you become immersed in cover feed. Cover feed replaces the lock screen and home screen. It's a window into what's happening with your friends - friends finishing a bike race, your family sharing a meal or an article about your favorite sports team. These are the beautiful, immersive experiences that you get through Home."

-Facebook

"You might have missed these updates before, but now they're a central part of the Home experience. Since Home is both your lock screen and home screen, the content comes right to you. You can flip through to see more stories, and double tap to like what you see.

Cover feed is for those in-between moments ­like waiting in line at the grocery store or between classes ­when you want to see what's going on in your world."

-Facebook

"With chat heads you can keep chatting with friends even when you're using other apps. When friends send you messages, a chat head appears with your friend's face, so you see exactly who you're chatting with. Messages reach you no matter what you're doing - whether you're checking email, browsing the web, or listening to music.

You can move chat heads around and respond to messages. And since SMS is integrated into Facebook Messenger for Android, chat heads include Facebook messages as well as texts."

-Facebook

"Cover feed is great for seeing everything going on in the world. But when something happens that's more important and directed at you, like a friend posting on your timeline, you'll receive notifications with their profile pictures.

To open notifications, just tap them. And if you don't want to deal with them right now, you can just swipe to hide them and keep flipping through cover feed until you want them back."

- Facebook

"It's as easy to get to your apps in Home as it is on any other phone. Swipe up to see your favorite apps in the launcher. There's also a screen containing all of your apps, and you can drag your favorite apps to the launcher."

- Facebook

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