Facebook not 'liked' at Oppenheimer

The research firm cut estimates on the social networking giant, citing weak seasonal trends.

By TheStreet Staff Apr 9, 2013 12:02PM

thestreet logo Thumb Down copyright Milton Montenegro, Getty ImagesBy Chris Ciaccia


The advertising business isn't all Mad Men and fancy suits. Sometimes you have to work. If it's a seasonally weak quarter, results may not be in your favor, especially if your company is Facebook (FB).


Oppenheimer analyst Jason Helfstein lowered earnings estimates on the social networking giant going into the company's first-quarter, citing concerns over weak seasonality in the advertising business. He noted the first-quarter is heavily weighted toward lower-priced spending and, combined with Facebook's mobile advertising product, Helfstein is cautious.


The analyst lowered non-GAAP earnings estimates for both 2013 and 2014, lowering 2013 estimates to 67 cents from 72 cents per share, while 2014 estimates were lowered to $1 per share from $1.08 per share. He kept his "outperform" rating, but lowered the price target to $32 from $33.


Facebook is rapidly transitioning toward mobile, with CFO David Ebersman saying in an interview (TheStreet) that 2012 was the year Facebook "became a mobile company." Facebook's most recent product announcement, Facebook Home, is representative of that mindset. 


Helfstein noted mobile accounted for 60% of the time spent on Facebook in February, up from 34% in March 2012, with Facebook accounting for nearly a quarter of all time spent on the mobile web, up from 11% in March 2012. At the Facebook Home announcement, CEO Mark Zuckerberg said consumers are looking at their phones 100 times a day, so this data backs up that claim.


Despite consumers increasingly turning toward mobile usage, mobile advertising is still not up to par with desktop advertising. It appears the shift is turning in favor of mobile, given Facebook's recent earnings, but the process is still playing out.


Analysts polled by Thomson Reuters expect Facebook to earn 12 cents per share on $1.43 billion in revenue for the first quarter.


Once the seasonally weak first-quarter ends, that should provide some relief for Facebook. "Given the difficulty in estimating mobile advertising, the impact of the Facebook Exchange and 1Q seasonality, we see Street estimates at a positive inflection point," Helfstein wrote in his note.


Shares of Facebook were lower in midday trading Tuesday, off 0.41% to $26.74.



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