Facebook Earnings Results: Still Not What Wall Street Wants

Mark Zuckerberg, chief executive officer and founder of Facebook Inc.David Paul Morris/Bloomberg *** Local Caption *** Mark Zuckerberg
David Paul Morris/Bloomberg
Investors looking for relief from the sting of buying Facebook (FB) around its IPO price will have to wait a while longer.

Shares of the social network briefly fell more than 1 percent in after-hours trading after the company reported slightly worse than expected earnings.

Facebook earned $0.12 a share in adjusted profits on $1.46 billion in revenue. Analysts were expecting $0.13 and $1.44 billion, respectively.

Without subtracting foreign exchange, stock-based compensation, and other one-time costs, Facebook earned $0.09 a share, or a penny better than the consensus data compiled by AOL DailyFinance. Revenue increased 38 percent year-over-year as Facebook's installed user base grew to 1.11 billion, up 23 percent over the same period.

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Efforts to attract more mobile users also seem to be taking hold. More than 750 million people now access the social network via smart devices, up 54 percent year over year.

Instagram, the controversial photo network accessed via smart devices, reached 100 million active users who may soon see ads in their feeds. Revenue from mobile ads delivered via the Facebook app rose 30 percent.

That mobile momentum is coming at a good time. "Home," Facebook's social app layer for Android phones that some see as a shot across Google's (GOOG) bow, hasn't exactly been a hit among the tech-savvy. The better news for investors? Facebook is earning more from its business now than it did even one quarter ago:
MetricQ2 2012Q3 2012Q4 2102Q1 2013
Revenue$1.18 billion$1.26 billion$1.58 billion$1.46 billion
Earnings Per Share($0.08)($0.02)$0.03$0.09
Sources: AOL DailyFinance, Facebook, Facebook.

"We've made a lot of progress in the first few months of the year," said Facebook founder Mark Zuckerberg in a press release. "We have seen strong growth and engagement across our community and launched several exciting products."

He's no doubt right. Trouble is, investors and Wall Street -- which once regarded Facebook as a $100 billion enterprise -- are still looking for much more.

Motley Fool contributor Tim Beyers owned shares of Google at the time of publication. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. For further analysis of the social network's mobile ambitions, try our newest premium research report in which we dissect Facebook's expanding empire and tell you whether there's reason to "like" the stock for your portfolio.

9 Scary Ways Criminals Use Facebook
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Facebook Earnings Results: Still Not What Wall Street Wants

When criminals hack a Facebook account, they typically use one of several available "brute force" tools, says Grayson Milbourne, Webroot's manager of threat research for North America. These tools cycle through a common password dictionary, and try commonly used names and dates, targeting hundreds of thousands of different email IDs. Once hacked, an account can be used as a platform to deliver spam, or -- more commonly -- sold. Clandestine hacker forums are crawling with ads offering Facebook account IDs and passwords in exchange for money. In the cyber world, information is a valuable thing.

Commandeering occurs when a criminal logs on to someone else's account using an illegally obtained ID and password. Once online, they have the victim's entire friend list at their disposal and a trusted cyber-identity. The impostor can then run a variety of confidence schemes, such as the popular "London scam," in which the "friend" claims to be stranded overseas and in need of money to make it home. The London scam has a far higher success rate on Facebook -- and specifically on commandeered accounts -- because there is a baseline of trust between users and those on their friends lists.

Profile cloning is the act of using unprotected images and information to create a Facebook account with the same name and details of an existing user. The cloner then sends friend requests to all of the victim's contacts, who will likely accept them, as they appear to be from someone they know. Those accepted friend requests give the con artist access to his new "friends'"  personal information, which can be used to clone other profiles or to commit fraud.

As Grayson Milbourne puts it, "Exploiting a person's account and posturing as that person is just another clever mechanism to use to extract information." Perhaps what's scariest about this kind of crime is its simplicity. Hacking acumen is unnecessary to clone a profile; the criminal simply needs a Facebook account.

Cross-platform profile cloning is when a cyber criminal obtains information and images from Facebook and uses them to create false profiles on another social-networking site, or vice versa.

Because the profile is often cloned to a social networking platform that the victim doesn't use, this kind of fraud may also take longer to notice and remedy.

Phishing on Facebook usually involves a hacker posing as a familiar individual or respectable organization, and asking for a user's personal data, usually via a wall post or direct message.

Often, users will be directed to click on a link. Once they do so, their computer may be infected with malware, or they may be directed to a website that offers a compelling reason to divulge sensitive information.

A classic example would be a site that congratulates its victims for having won $1,000 and prompts them to fill out a form to collect their prize -- a form that requests credit card, bank account or Social Security numbers, which can then be used by the fraudsters.

Also becoming increasing common, warns Milbourne: "spearphishing," a practice that uses the same basic idea but targets users through their individual interests.

In this common con, the scammers direct users via some sort of clickable enticement to a convincing, but spurious, Facebook log-in page. When the victims enter their usernames and passwords, they are collected in a database, to be used by the original scammer or resold to other criminals.

Once scammers have a user's login information, they can take advantage of the identity through apps like Facebook Marketplace. Posing as a reputable user lets the scammer capitalize on the trust that his victim has earned to sell fake goods and services, or promote brands they have been paid to advertise.

In affinity fraud, con artists assume the identities of people in order to exploit the trust of those close to them to steal money or information. Facebook facilitates this type of fraud because people on the social network often end up having a number of "friends" they actually do not know personally and yet implicitly trust.

Criminals can infiltrate a person's group of friends and then offer someone deals or investments that are part of a con. They can also assume an identity by hacking into a person's account and asking their friends to wire them money, or give them sensitive information like a Social Security or credit card number.

Few sites provide an easier source of basic personal information than Facebook. While it is possible to keep all personal information on Facebook private, users frequently reveal their email addresses, phone numbers, addresses, birth dates and other pieces of private data. As security experts and hackers know, this kind of information often finds its way into passwords or answers to "secret" security questions. While the majority of unprotected information is mined for targeted advertising, it can be a used for more pernicious ends such as profile cloning and, ultimately, identity theft.

Most mass email advertisements are legal, if annoying. However, the growth of social networking has allowed for a new kind of spam called clickjacking. Clickjacking uses an advertisement for a viral video or article as an inducement to click on a link. Once clicked, the link sends the user to a page that tricks them into taking actions that they don't realize they are doing, such as sending an advertisement to all their friends' walls, buying an item via a concealed page, or revealing personal data.  This has become such an issue for Facebook that earlier this year, the company  teamed up with the U.S. Attorney General to try to combat the problem.

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