Jim Harrer


Facebook Q2 2012 Results Analysis From The Cigar Club

facebook buy sell holdSo last night the peanut gallery, uh sorry, my cigar club, wanted to talk about Facebook's Q2 2012 results.  Here is a recap for those who don't know:

Facebook, Inc ($FB) reported pretty flat year-over-year earnings growth. They earned 12 cents per share in the quarter that exceeded the consensus estimate by three cents. However, including stock-based compensation, payroll taxes and income tax adjustment, Facebook lost $.08 cents per share compared with earnings of $.011 cents per share in the year-ago quarter.

Revenue jumped 32.3% year over year to $1.18 billion, slightly better than Wall Street's estimate of $1.15 billion. The year-over-year growth was driven by strong advertising revenue (84% of the total revenue) that climbed 28% year over year to $992.0 million. The rest of the revenue from payments & other fees in the quarter. The strong upside in advertising revenues was primarily driven by an 18% increase in the number of ads delivered based on growth in the user base and an increase in average number of ads per page from the prior-year period.  Cash flow from operations increased by $242 million.

How are investors taking the news this morning?  Facebook is down 14.14% to $23.05 (7/27/2012 @ 11:32 EST) check it now

My weekly cigar group went into last night's smoke pretty depressed.  A couple of them got in on the IPO of $38.00 and thought they had purchased extra special rare gold on May 18, 2012 when it appeared on NASDAQ's wall.  Half of the group of six passed on buying Facebook after hoodie-gate, they're words not mine.  I was on the other side of the fence, I purchased a small block, in the after market when it first dipped.  So the group is pretty equally divided three and three, stockholders of Facebook vs really old money who love Wells Fargo and AT&T.  Yes, that is a dig and I will pay for it next week.

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