Facebook reports slowdown in revenue growth

Screens display the start of trading in Facebook shares at the NASDAQ stock exchange on Times Square in New York, on May 18, 2012.

Jeff Horwich: We're watching for a few more second-quarter earnings reports today. Chevron and Merck might be some of the more interesting ones.  A lot of the reports we've seen so far this week have been disappointing, including Facebook.

Here's Marketplace's Nancy Marshall-Genzer.


Nancy Marshall-Genzer: Facebook reported a drastic slowdown in revenue growth yesterday. Facebook's growth rate in the second quarter was the slowest since early 2011. That's was a bitter blow for investors who valued the company based on expectations of rocketing revenues. Facebook didn't help matters by not giving analysts its outlook for the rest of the year.

The big test for Facebook is whether it can make money on it mobile app. Facebook just started showing mobile ads this spring.

Michael Gartenberg is research director at Gartner.

Michael Gartenberg: If Facebook were starting today it would almost certainly be starting, not as a web based service on the PC. It would start as a mobile application and service. They've emphasized that they need to move into this space.  Clearly they're planning to make that attack here.

Facebook wasn't the only one to disappoint investors yesterday. Amazon's second-quarter net income came in at $7 million -- a drop of 96 percent from the same time last year. Starbucks cuts its outlook for the third quarter, as consumers continue trimming their spending.

In Washington, I'm Nancy Marshall-Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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