Tag Archives: yhoo

Facebook (FB) CEO Mark Zuckerberg was applauded on Wall Street for his gutsy decision to spend $19 billion on fast-growing mobile messaging app WhatsApp. But to regular Joe comedians, Zuckerberg is a laughingstock for spending so much on a 5-year-old startup company with 55 employees and 2013 revenue said to be $20 million. The deal, announced Feb. 19, dwarfed the price of any single acquisition ever done by a host of tech giants, including Apple (AAPL) Google (GOOG), Microsoft (MSFT) and Yahoo (YHOO).  New “Tonight Show” host Jimmy Fallon poked fun at the deal last week. “Some major business news,” he said. “Facebook bought a messaging app called WhatsApp – WAZ-UP – for $19 billion in an effort to hold on to teenagers who no longer think Facebook is cool. Yeah, WhatsApp. Cuz nothing says ‘cool’ like an app named after a Budweiser commercial from the ’90s.”

Facebook’s (FB) purchase of mobile messaging service WhatsApp for as much as $19 billion easily beats the price of any single acquisition ever done by a host of tech giants, including Apple (AAPL), Google (GOOG), Microsoft (MSFT) and Yahoo (YHOO). The lofty price tag stunned Wall Street, but analysts seemed generally in favor of the purchase. The deal translates to about 9% of Facebook ‘s (FB) market value. Investors changed their minds about the WhatsApp acquisition during the trading day Thursday. Facebook stock was down 3.5% in morning trading, but reversed course and ended the session up 2.3%. Shares hit a record high of 70.11 in the stock market today. Following its $1 billion purchase of Instagram in 2012, Facebook has shown a willingness to spend big on fast-growing social networking companies with little revenue but big user bases. With its agreement Wednesday , Facebook will pay $4 billion in cash and $12 billion in Facebook stock, plus $3 billion in options, for WhatsApp, a company with more than 450 million monthly active users. WhatsApp generated “a minuscule $20 million in revenue last year,” Forbes reported. Facebook will spend 35% of its $11.4 billion in cash on hand to make the deal happen. Compare that with Apple, which was sitting on $159 billion in cash and marketable securities as of Dec. 28. It has never made a billion-dollar acquisition. Apple’s largest deal to date is the purchase of NeXT in 1997 for about $400 million, which brought co-founder Steve Jobs back to Apple and provided the core for its new Mac operating system.