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Facebook Fails to Impress in Earnings Debut (Update 1)

Updated from 4:54 p.m. EST to provide executive comments from the conference call in the third and fifth paragraphs.

NEW YORK ( TheStreet) -- Facebook (FB - Get Report) tried to "friend" Wall Street as the company reported in-line earnings in its first quarterly report as a public company Thursday but the performance wasn't enough to stop shares from sinking in after-hours action.

The social networking giant reported non-GAAP earnings of $295 million, or 12 cents per share, on revenue of $1.18 billion. The average estimate of analysts polled by Thomson Reuters was for a profit of 12 cents a share in the June-ended period on revenue of $1.15 billion.

The non-GAAP profit excludes share-based compensation and related payroll expenses, Facebook said. GAAP expenses for the quarter were $1.93 billion, including stock based compensation, which totaled $1.3 billion. The headcount at end of quarter, was just over 4,000, CFO David Ebersman said on the conference call.

On a GAAP [generally accepted accounting principles] basis, Facebook lost $157 million, or 8 cents a share, in the latest quarter. The loss reflects costs related to the company's disastrous mid-May initial public offering. Specifically, Facebook said the GAAP loss largely reflects "the effect of the accounting treatment of pre-2011 RSUs [restricted stock units]."

"Our goal is to help every person stay connected and every product they use be a great social experience," said Mark Zuckerberg, Facebook founder and CEO in the press release. "That's why we're so focused on investing in our priorities of mobile, platform and social ads to help people have these experiences with their friends."

Zuckerberg addressed the question of mobile monetization on the call. He noted that Facebook is the most used app on a lot of platforms, and "we want to not have just apps, but be deeply integrated as well. We want to have apps built on top of Facebook." He said it didn't make sense for the company to build its own phone.

At the end of the quarter, Facebook had $3.9 billion in cash. As of June 30, the company said it had 955 million monthly active users, up 29% from a year ago. For the month of June, Facebook said daily active users were 552 million on average, up 32% from year-over-year.

Shares of Facebook closed the regular session down 8.5% to wind up at $26.84. In after-hours action, the stock was last quoted at $24.08, down 10.3%, on volume of 17.1 million, according to Nasdaq.com.

Interested in more on Facebook? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices.

-- Written by Chris Ciaccia in New York

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