NEW YORK (CNNMoney) -- Facebook's second earnings report as a public company comes out late Tuesday, and the social network is under pressure to prove it can make more money on its 1 billion users.
Facebook watchers are focused on two key areas: The impact of FarmVille maker Zynga's terrible quarter, and the company's skill at monetizing its everyday users, especially on mobile.
Investors are looking for reassurance on those fronts, as Facebook(FB) shares have lost half their value since the company's May IPO. Analysts polled by Thomson Reuters expect Facebook to have earned 11 cents per share on sales of $1.2 billion.
The site signed up its 1 billionth user this month, which means Facebook now reaches one out of every 7 people on the planet. It's an impressive stat, but it doesn't mean much financially if Facebook can't turn that user base into a growing revenue source.
A central element of the monetization problem is Facebook's sluggish transition to a mobile-dominated society. The site wasn't built with mobile in mind, and the company was slow to develop device-optimized apps. It's now addressing the app gap -- an overhauled iOS app launched in August -- but Facebook still isn't showing mobile users as many ads as it would if accessed on a desktop.
That's a huge, missed revenue opportunity. Half of Facebook's users access the site at least once a month through mobile devices, and a whopping 102 million users only use Facebook's mobile site. Advertising accounted for 85% of Facebook's total 2011 revenue.
Also on the advertising front, there are rumors afoot that Facebook is testing both a mobile ad network and a "social search engine" to rivalGoogle (GOOG, Fortune 500). Each could be potentially huge revenue streams.
source: Julianne Pepitone
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