siliconwafer writes:
"Facebook's purchase of WhatsApp has generated a lot of noise in the financial and tech industries, with some calling the purchase price 'down-right silly' and 'jaw-dropping', and others have said the price is fair, but question the strategy. Is the purchase price evidence that we're entering entering another tech bubble reminiscent of the 1990s? Some say no, while others believe that a bubble may exist only in social media, given that the Global X Social Media Index ETF has outperformed the NASDAQ over the past year."
(Score: 5, Interesting) by frojack on Saturday February 22 2014, @01:36AM
Avoid Taxes? Nah.
They buy with stock is because they don't have to go out and borrow so much. They didn't have that much cash.
See all that Capital Stock [yahoo.com]
they had in their treasury? These were shares retained when they had their big IPO. Twelve billion two hundred ninety-seven million, sitting in the treasury, all given value out of thin air by their IPO and subsequent stock price rise.
This is an asset they paid nothing for. They trade asset for asset, because that's what WhatsApp is worth. Who says its worth that much? Well Facebook said so, even if nobody else believed it.
The market was getting very worried, and Facebook's stock would have started falling because the teen segment is leaving facebook in droves [mercurynews.com], and they are going toward messaging systems like WhatsApp.
So if Facebook stock price fell to $62,(from its current $65.50) they would have lost more then 16 billion in market cap simply by doing nothing.
Looked at in those terms, if FB can hang onto those users (and somehow monitize them over time) and keep the stock from falling, spending 16 billion might be a bargain in their eyes.
Very astute of WhatsApp owners to realize just how desperate Facebook was.
Discussion should abhor vacuity, as space does a vacuum.