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Increases in capital expenditures historically have a direct correlation to revenue at Apple, and a recent spike in spending suggests the company is set to deliver a record quarter of at least $56.4 billion in revenue this holiday season.

If Apple were to sell a smaller 16-gigabyte iPad for $299 this holiday, one analyst believes the company would sell as many as 6 million units this holiday season.

On the heels of a rumor that Apple is readying a minor update of the iPad ahead of the holiday season, an unverified report from the same publication claims that Apple is interested in returning to a one-LED backlight module solution instead of the two-LED design used in the current iPad.

Summer is approaching, and now may be a good time to evaluate your on-going projects and to complete pending tasks left over from the hustle and bustle of the holiday season. Last summer I read a classic book on workflow management, David Allen’s Getting Things Done: The Art of Stress-Free Productivity. I highly recommend this book if you are a social strategist or social manager juggling a lot of details and tasks all at once. 

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Zynga’s revenues rose 32 percent to $321 million in the first quarter, beating analysts’ estimates of $316.8 million in revenue and earnings of 5 cents a share excluding stock-based expenses. Bookings came it at a record $329 million, up 15 percent over the year before, and up 7 percent compared to the previous quarter — meaning Zynga didn’t see that seasonal decline in revenues that Facebook did.

The company also raised its annual guidance to $1.425 billion to $1.5 billion in bookings, up from $1.35 to $1.45 billion. Shares are up 1.8 percent in after-hours trading to $9.58. Excluding stock-based expenses of $133.9 million, Zynga posted earnings per share of 6 cents. Including those expenses, Zynga had a net loss of $85.4 million.

What’s notable is how Zynga has gotten its user numbers way up on a quarterly basis, even though gaming companies usually see seasonal trends that help them during the holiday season. The OMGPOP acquisition, which gave Zynga the game “Draw Something” certainly helped. Monthly unique users, which doesn’t double count consumers who play more than one game, rose slightly to 182 million from 153 million in the fourth quarter. Zynga’s number of daily active users rose to 62 million from 54 million in the holiday season. Monthly active users got a huge tick up to 292 million from 240 million in the fourth quarter.

In another positive sign, Zynga’s number of monthly unique payers rose 21 percent quarter-over-quarter to 3.5 million. The downside though is that average bookings per user are down on quarter-over-quarter basis to $0.051 from last quarter’s record high of $0.061. So like  Facebook, user growth has compensated to stagnant quarterly growth in revenue per user.

Here’s the release. We’ll be analyzing it as we go so stay tuned for updates:

SAN FRANCISCO, Calif. – April 26, 2012 – Zynga Inc. (NASDAQ: ZNGA), the world’s leading provider of social game services, today announced financial results for the quarter ending March 31, 2012.

• ·         Q1 record bookings of $329 million, up 15% year-over-year
• ·         Q1 revenue of $321 million, up 32% year-over-year
• ·         Q1 adjusted EBITDA of $87 million, down 23% year-over-year driven primarily by increased investment in new game development
• ·         Q1 non-GAAP EPS of $0.06 and GAAP EPS of ($0.12) 

Business Highlights

• Daily active users (DAUs) increased from 62 million in the first quarter of 2011 to 65 million in the first quarter of 2012, up 6% year-over-year.
• Monthly active users (MAUs) increased from 236 million in the first quarter of 2011 to 292 million in the first quarter of 2012, up 24% year-over-year.
• Monthly unique users (MUUs) increased from 146 million in the first quarter of 2011 to 182 million in the first quarter of 2012, up 25% year-over-year.
• Average daily bookings per average DAU (ABPU) increased from $0.051 in the first quarter of 2011 to $0.055 in the first quarter of 2012, up 8% year-over-year.
• Monthly Unique Payers (MUPs) increased from 2.9 million in the fourth quarter of 2011 to 3.5 million in the first quarter of 2012, up 21% sequentially.
• Zynga experienced growth in both mobile and web bookings year-over-year and quarter-over-quarter, with the majority of bookings growth coming from mobile.
• Zynga added six games during the first quarter of 2012, including two titles on web-based platforms: Hidden Chronicles, our first game in the hidden object category, and Zynga Slingo, our first game in the arcade category. Zynga added four titles on mobile platforms: Scramble with Friends, Dream PetHouse, Dream Heights, and Draw Something, which we acquired in March 2012.
• As of March 31, 2012, Zynga held eight of the top ten games on Facebook, based on DAUs, including CastleVille, launched in the fourth quarter of 2011, and Hidden Chronicles, launched in the first quarter of 2012.
• In March, we launched the Zynga Platform, which includes Zynga.com (beta release), a new destination for social games, and Zynga Platform Partners, a program that enables third-party developers to publish their games through Zynga.

First Quarter 2012 Financial Summary

• Bookings: Bookings were $329.2 million for the first quarter of 2012, an increase of 15% compared to the first quarter of 2011 and an increase of 7% compared to the fourth quarter of 2011.

• Revenue: Revenue was $321.0 million for the first quarter of 2012, an increase of 32% compared to the first quarter of 2011 and an increase of 3% compared to the fourth quarter of 2011. Online game revenue was $292.8 million, an increase of 27% compared to the first quarter of 2011 and an increase of 3% compared to the fourth quarter of 2011. Advertising revenue was $28.2 million, an increase of 117% compared to the first quarter of 2011 and an increase of 3% compared to the fourth quarter of 2011.

• Adjusted EBITDA: Adjusted EBITDA was $86.8 million for the first quarter of 2012, a decrease of 23% compared to the first quarter of 2011 due primarily to increased investment in developing new games.  Adjusted EBITDA was up 28% from the prior quarter. 

• Net income (loss): Net loss was $85.4 million for the first quarter of 2012 compared to net income of $16.8 million for the first quarter of 2011. $133.9 million of stock-based expense was included in the net loss for the first quarter of 2012 compared to $14.5 million of stock-based expense included in the first quarter of 2011.

• Non-GAAP net income:  Non-GAAP net income was $47.0 million for the first quarter of 2012, a decrease of 38% compared to the first quarter of 2011 and an increase of 27% compared to the fourth quarter of 2011.

• EPS:  Diluted EPS was ($0.12) for the first quarter of 2012 compared to $0.00 for the first quarter of 2011.

• Non-GAAP EPS:  Non-GAAP EPS was $0.06 for the first quarter of 2012 compared to $0.11 for the first quarter of 2011 and $0.05 for the fourth quarter of 2011.

• Cash and cash flow: As of March 31, 2012, cash, cash equivalents and marketable securities were $1.5 billion, compared to $995.6 million as of March 31, 2011 and $1.9 billion as of December 31, 2011. Cash flow from operations was $78.8 million for the first quarter of 2012, compared to $103.7 million for the first quarter of 2011.  Free cash flow was $43.8 million for the first quarter of 2012, compared to $53.4 million for the first quarter of 2011.

• Secondary offering: On April 3, 2012 Zynga completed an underwritten public offering of 49,414,526 shares of its Class A common stock. As part of the offering, all selling stockholders, as well as all officers and directors, agreed to lock-up agreements that extend the transfer restrictions on their shares until at least 90 days following the offering.  The principal purposes of the offering were to facilitate an orderly distribution of shares and to increase the company’s public float. Zynga did not receive any proceeds from the sale of shares in the offering.

2012 Outlook

As of today, we’re updating our outlook for 2012 as follows:

• Bookings are projected to be in the range of $1.425 billion to $1.5 billion.  We expect that growth will be weighted towards the second half of the year with slower sequential growth in the first half of the year.
• Adjusted EBITDA is projected to be in the range of $400 million to $450 million.
• Stock-based expense is projected to be in the range of $420 million to $445 million excluding the impact of equity awards that may be granted in connection with potential future acquisitions.
• Capital expenditures are projected to be in the range of $390 million to $410 million which includes the purchase of our corporate headquarters building in April 2012.
• Our effective tax rate for non-GAAP net income is projected to be in the range of 25% to 30%.
• Non-GAAP weighted-average diluted shares outstanding are projected to be approximately 880 million shares in the fourth quarter of 2012.
• Full year 2012 non-GAAP EPS is projected to be in the range of $0.23 to $0.29.

Just as a test, last month I did a targeted ad campaign on Facebook for my 99 cent book. The results were practically zero–very few clickthroughs and no sales. Nor did I hear from anyone who saw the ads themselves.

Of course, one small test doesn’t mean anything in a grand scale. But now, Ad Age is taking a closer look at how Facebook’s revenue from advertising is doing:

Like a lot of ad businesses, Facebook sales slowed from the fourth quarter of last year — which includes holiday season-ad spending — and the first quarter of 2012, a period when a lot of marketers pull back spending.

Sales came in at $1.06 billion in the first quarter, a 45% increase from $731 million in 2011, but a slight decline from fourth-quarter sales of $1.13 billion reported in February. Facebook also grew faster in the fourth quarter, up 55% from $731 million in sales for the same period last year. Net income fell 12% to $205 million from $233 million.

I’m not a Facebook basher at all. I’m on there several times a day and it’s allowed me to keep up with friends and family even as I’ve moved 2500 miles away from most of them. Still, it seems to be a tricky recommendation to make as an advertising vehicle. Brands, of course, can have a different sort of presence on the site, but if Facebook wants to keep revenue climbing, it’s going to have to figure out how to convince its users to buy products, not just be social. And it’s going to get harder as the mobile use of the site increases, which leaves less room for advertising.

Have you done any Facebook efforts for your clients? Do you even pay attention to the ads you see on the sides of FB pages?

Amazon misses Wall Street expectations with a 57 percent decline in net income despite tripling Kindle sales during the holiday season.

While Amazon isn’t selling half as many Kindle Fires as iPads, Stifel Nicolaus said Monday that first quarter shipments of the new tablet rose to 6 million, placing the Fire’s ramp-up on par with that of the original iPad while carving out a strong-hold on the low end of the market this past holiday season.

The Pew Research Center’s Internet & American Life Project is releasing a new study today that provides further evidence of the growing trend of consumers using mobile phones in stores for purchasing decisions. Pew says that more than half of adult cell phone owners used their cell phones while they were in a store to seek help with purchasing decisions this past holiday shopping season.

According to the report, 38% of cell owners used their phone to call a friend while they were in a store for advice about a purchase they were considering making And 24% of cell owners used their phone to look up reviews of a product online while they were in a store, with 25% of adult cell owners using their phones to look up the price of a product online while they were in a store, to see if they could get a better price somewhere else.

One third (33%) used their phone specifically for online information while inside a physical store—either product reviews or pricing information. In fact, one in five “mobile price matchers” ultimately made their most recent purchase from an online store, rather than a physical location.

This is interesting considering Amazon’s move over the holidays to offer discounts to consumers on any product purchased via its price comparison mobile app. This was a huge blow to physical retailers, who called the move unfair.

Pew reports that cell owners ages 18-49 are significantly more likely to use their phones for online product reviews than are cell owners ages 50 and older. Cell owners ages 65 and older are especially unlikely to use their phones to look up information in stores—just 4% did so this holiday season.

In terms of other demographics, urban and suburban cell owners are roughly twice as likely as rural cell owners to have recently used their phone to look up online reviews of a product they found in a physical store.

Unsurprisingly, online price matching and looking up online reviews frequently go hand in hand. Overall, of the 33% of cell owners who used their phone recently in a store to look up either product reviews or prices online, roughly half (representing 17% of all cell owners) used their phones to engage in both of these activities.

When asked what happened on the most recent occasion where they used their phone to look up the price online of a product they found in a store, mobile price matchers point to a range of outcomes: 37% decided to not purchase the product at all, 35% purchased the product at that store, 19% purchased the product online and 8% purchased the product at another store.

While we’ve been witnessing the fact that mobile is becoming a significant part of the in-store and online shopping experience, the Pew report’s data only emphasizes this trend. And although consumers tend to shop at increased levels during the holiday season, there’s no doubt that mobile is going to be an important engagement platform for both online and brick and mortar retailers throughout the year.

I realize most of us are already well-focused on 2012, so a look back at the 2011 holiday season may seem a bit dated. However, the holiday season provides search marketers a snapshot of behavior that should prove relevant for the upcoming year, though perhaps on a smaller scale. To gain a more…



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