Forbes provides backstory for Facebook/WhatsApp


"One day I want you to become bigger than us in number of users ... What you guys do is a much more common-use case," Mark Zuckerberg (FB +4%) told WhatsApp CEO Jan Koum as they hammered out Facebook's $19B acquisition of the mobile messaging leader, according to a Forbes cover story.

The talks reportedly started after Facebook exec Amin Zoufonoun learned Koum was meeting Google's Larry Page - Google has denied bidding for WhatsApp, and Koum says he got no sign Page was interested in doing so. Zuck initially "offered a range of $15 billion and higher;" Koum pushed for $20B.

Forbes also makes note of WhatsApp focus on speed and simplicity. The company relies on the messaging-centric Erlang programming language and open-source FreeBSD OS, considers features such as stickers and in-app games (embraced by rivals) "junk," and for now is only charging in markets where mobile payments/billing are simple and mature.

Om Malik obseres WhatsApp has been successful striking deals with carriers for service plans that provide access to WhatsApp but no other data services, and that Facebook, contending with a slew of apps that collectively "unbundle" its core services, has been trying to reach similar deals.

Earlier: Facebook rallies on Stifel PT hike

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Comments (33)
  • Tradevestor
    , contributor
    Comments (5014) | Send Message
     
    Be careful about buying here though http://seekingalpha.co...
    5 Mar 2014, 07:35 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    Facebook has a market valuation of $182 billion on only $1.5 billion in net revenue.

     

    The market values Facebook (essentially a dotcom) almost EXACTLY the same as Bank of America (BAC).

     

    Bank of America net revenue?

     

    $12.6 billion with $233 billion in shareholder's equity!!

     

    The social media bubble is getting strained here and now I am looking for an entry point...to profit from the intense pullback that is coming.
    5 Mar 2014, 08:13 PM Reply Like
  • Patent News
    , contributor
    Comments (1475) | Send Message
     
    so are you short?

     

    the article gives very little hope of big usage turning into big profits anytime soon.

     

    secondary on way for FB?
    5 Mar 2014, 08:14 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    Like a hungry cheetah in the high grass watching the gazelle...I am looking for an opportunity.

     

    Shorting bubbly tech names that get heavy rotation on CNBC (Cheerleader's n' Broker's Channel) is a delicate dance.

     

    Patience will be rewarded.
    5 Mar 2014, 08:23 PM Reply Like
  • ReligiousWacko
    , contributor
    Comments (1862) | Send Message
     
    So agree with you about CNBC. Part of me thinks SEC should shut it down. The options trading show at close is just insane random gambling "advice".
    5 Mar 2014, 10:22 PM Reply Like
  • BAHAMAS1
    , contributor
    Comments (5167) | Send Message
     
    DVL-
    Who are you kidding. I've now been hearing that for weeks from you and it's getting stale.
    The more FB goes up, the more you're going to make a fortune shorting it.

     

    The minute FB takes a pause you'll say you shorted it.

     

    Why not short it now in the face of all the analysts upgrades if you're so sure its going down so hard.
    Cost average it.

     

    Or are you simply not sure that it is overvalued here ?
    5 Mar 2014, 08:48 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    BAHAMAS1:

     

    I am absolutely positive that the stock is overvalued (I've pointed to several metrics that show that).

     

    But, at the moment, the market is being irrational and the stock will be bid up until either a technical signal or a corporate signal triggers a reversal.

     

    Dotcom stocks were very, very overvalued in late 1998 but shorting then would have been a disaster.

     

    Like I've said shorting isn't easy but the most patient and careful shorts can make a nice, easy profit on a massive reversal.

     

    I hear a lot about FB "going up" but many longs don't seem to have a clue that stocks are based on earnings over the medium and long term and don't care because as Slick Jimmy Cramer says, "BUY BUY BUY".

     

    Don't be surprised the day that institutional investors suddenly seem to be interested in FB's earnings and earnings growth as it relates to its stock price. That day is coming.
    5 Mar 2014, 10:27 PM Reply Like
  • dnapes300
    , contributor
    Comments (36) | Send Message
     
    I'll buy fb at 5 dollars a share, this federal reserve bubble will pop
    5 Mar 2014, 09:09 PM Reply Like
  • Market Trends Investor
    , contributor
    Comments (1272) | Send Message
     
    Don't fight the FED. It's a hard lesson that many of us need reminding from time to time. Myself included.
    5 Mar 2014, 09:17 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    Clearly, the smartest people in the room were from WhatsApp.
    5 Mar 2014, 10:03 PM Reply Like
  • Manitobatex
    , contributor
    Comments (1228) | Send Message
     
    You are likely right, but 5 years from now that will likely reverse itself.
    5 Mar 2014, 10:57 PM Reply Like
  • SaltyDog62
    , contributor
    Comments (838) | Send Message
     
    Koum was reported to say he was turned down for a job at FB, bet he is laughing his Ukranian ^&*( off now. Good job, what a way to go, from being an immigrant to one of the world's richest person. Love a good story like his.
    5 Mar 2014, 11:29 PM Reply Like
  • MiamiHeater
    , contributor
    Comments (3) | Send Message
     
    Growth stocks are not valued the same way as financials. To compare to B of A shows your intelligence or lack of it.
    6 Mar 2014, 02:05 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    Alrighty then, MiamiHeater:

     

    How about Toyota Motors (TM)?

     

    $179 billion market cap (less than Facebook)

     

    Profits?

     

    $18 billion with $135 billion in shareholder's equity

     

    [Facebook only has $15.5 billion in shareholder's equity]

     

    Or, sticking with technology, Samsung (OTC:SSNLF):

     

    $166 billion market cap (again, less than Facebook)

     

    Profits?

     

    $27 billion (!)

     

    Growth stocks are no different than hot potatoes in the Hot Potato game.

     

    Good luck getting out before the slam down.
    6 Mar 2014, 07:46 AM Reply Like
  • cashawash
    , contributor
    Comments (2889) | Send Message
     
    DVL, your comparisons amount to hogwash.
    Facebook is a separate business model, that differs from manufacturing, finance, and the auto industry.

     

    Your reasoning is as illogical as, comparing the salaries in baseball, to football, basketball, and soccer. Essentially, you are trying to make the argument that, one athlete in one sport is undervalued, versus another athlete in a totally different sport.
    Don't you see why even the most ardent sport fans never spend much time on such illogical and futile pursuits. No sports fan of sound mind has any appetite for engaging in such a time wasting, unproductive, and trivial debate.

     

    No one individual, and -- from the looks of it -- certainly not you; is smarter than the collective wisdom of the Market. So, go on, and keep shorting FB, but you need stop the excessive grandstanding.
    6 Mar 2014, 02:15 PM Reply Like
  • closethefed
    , contributor
    Comments (3) | Send Message
     
    Cashawash, your comment is nonsensical. Was it the "collective wisdom" of the market that shot the market up to unrealistic highs in 2007 or unmitigated speculation fueled by loose fed policies? Anyone that thinks collective wisdom is some kind of beacon is a bigger fool than the collective wisdom than the "collective wisdom" that nearly bankrupt the country by 2010.
    8 Mar 2014, 08:09 AM Reply Like
  • closethefed
    , contributor
    Comments (3) | Send Message
     
    Cashawash, your comment is ridiculous and nonsensical. Your analogy is just lame. Was it the "collective wisdom" of the market that shot the market up to unrealistic highs in 2007 or unmitigated speculation fueled by loose fed policies? Anyone that thinks "collective wisdom" is some kind of beacon is a bigger fool than the collective wisdom that nearly bankrupt the country by 2010.
    8 Mar 2014, 08:10 AM Reply Like
  • closethefed
    , contributor
    Comments (3) | Send Message
     
    Cashawash, you're comment is stupid and nonsensical. Was it the "collective wisdom" of the market that shot the market up to unrealistic highs in 2007 or unmitigated speculation fueled by loose fed policies? Anyone that thinks collective wisdom is a bigger fool than the collective wisdom.
    8 Mar 2014, 08:10 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    cashawash:

     

    Facebook, Bank of America, GM and McDonald's are all in the same sport:

     

    They offer products and services at a cost and they try to gain a profit by selling their wares at a slightly higher price than their costs.

     

    The idea that Facebook is "different" is eerily similar to the then popular idea that Pets.com or TheGlobe.com were different because they operated in a "new, exciting and futuristic" paradigm then called the "New Economy™".

     

    Old folks back then tried to tell the young and inexperienced "investors" of those early Web stocks that metrics like profitability and EBIT still matter, no matter what industry a company operates in but they were laughed out of the room.

     

    Yeah...that laughter stopped a couple of years later when reality raided the party and brought up the house lights...

     

    Facebook may be "different" but its current valuation is just the same story in a new book.

     

    Good luck.
    12 Mar 2014, 06:50 PM Reply Like
  • cashawash
    , contributor
    Comments (2889) | Send Message
     
    Are earnings and profitability an issue with Facebook?
    Unless you think the fastest growing large capitalization stock in the S&P is a fluke, based on smoke and mirrors, then I think you are simply trying to conflate a blue chip internet concern to former shell companies of the dotcom era over 15 years ago.
    That dog simply wont hunt, pal.
    You need to stop living in the past and embrace the present and the future.
    There is no need to fear!!!
    12 Mar 2014, 07:25 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    A. Earnings and profitability aren't an issue for Facebook but what one must pay for those earnings and profitability is a major issue. A lot of the stock prices in tech companies of the 1990s (that were profitable) collapsed along with the Pets.com of the era. If you have major profits in your Facebook stock but are still long and unhedged then good luck to you.

     

    B. There is no such thing as a "Blue Chip" Internet company except for maybe Google but that is because Google has superior technology and engineering talent.

     

    Any company that is based solely on the whims of the world's young people can NEVER be a "Blue Chip" like (KO) or (http://bit.ly/th9cEw).

     

    A "Blue Chip" is a company that will most likely be around in 25 years.
    16 Mar 2014, 05:20 AM Reply Like
  • bobbydoggy
    , contributor
    Comments (2) | Send Message
     
    Facebook is just getting started. I averaged out at $23.00/share and I am still holding. The biggest mistake I ever made was selling Google at $150.00/share and thinking I was cashing out before the crash...the second biggest mistake was selling Apple at $126.00/share and thinking I was smarter than the herd. FB is just getting started and I am all in!
    6 Mar 2014, 02:30 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11355) | Send Message
     
    Apple and Google have superior technology and in Apple's case, they make stuff.

     

    Google re-invented Web search. What has Zuck invented other than a hugely popular social website?
    6 Mar 2014, 07:49 AM Reply Like
  • bobbydoggy
    , contributor
    Comments (2) | Send Message
     
    FB is just getting started. I averaged at just under $25/share and I am still holding. I have made many mistakes as an investor (selling Ford at $3.00/share, Apple at $134.00/share and Google at $146.00/share), I won't add FB to that list.
    6 Mar 2014, 02:31 AM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    I think you will when you finally sell under $25. If you were so wrong before going to other extreme will hardly make it right.
    6 Mar 2014, 12:08 PM Reply Like
  • duggard
    , contributor
    Comments (107) | Send Message
     
    Bobbydoggy-I was in a very similar situation. I started accumulating my long position at 18. I bought leap calls and sold puts to buy more calls. Very aggressive. I continued doing this until the stock hit 45. Starting when the stock hit 65, I sold off all my positions that I had over 12months to qualify for long term capital gains. I am still sitting on long positions but bought put protection againt them. And as I believe the stock has entered a higher state volatility, I've been playing the volatility from the short side. I've covered my puts 4 times since the last FB earnings and I am looking to cover by April 19 72.50 puts tommorrow or some time soon. I believe FB is here to stay. What will be the peaks and the lows? Who knows... but it is never a bad idea to ring the register and hedge your positions. With FB, it is definitely more luck than skill with me to make the kind of gains I have and I have no qualms about cashing in on some of that. Best wishes my friend!
    6 Mar 2014, 08:00 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    Obviously I think this acquisition was over-priced, but it's useful to think of it in different terms. I think the WhatsApp acquisition was an attempt to find a "leader" in the internet space, that is "disrupting" the phone/text business. Whether or not that disruption is enduring and is worth what was paid is another matter entirely.

     

    WhatsApp clearly knew they were a desired product and played that hand very well.
    6 Mar 2014, 03:51 AM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    If Whatsapp such a "leader" why no one ever heard of it untill FB shelled out 19 Billion dollars?
    6 Mar 2014, 12:11 PM Reply Like
  • cashawash
    , contributor
    Comments (2889) | Send Message
     
    Speak for yourself!
    You sound so jingoistic!
    WhatsApp enjoys broad appeal outside the U.S. of A.
    It's popularity is greatest in Asia, Europe and the emerging markets.
    465MM to 500 MM active users, and growing by over 2+MM users a day isn't chop liver, pal.
    That's part of Facebook's rationale for the buy out.
    WhatsApp gives FB a larger presence in those markets.
    6 Mar 2014, 02:27 PM Reply Like
  • Tomal
    , contributor
    Comments (2486) | Send Message
     
    There is a world outside USA you know? Whatsapp is big in emerging countries as it avoids text charges. It is also used by many foreign citizens and immigrants in US to keep in touch with friends and family at $1 yearly cost. You may argue about its valuation but your comment shows total ignorance of a world outside US.
    6 Mar 2014, 03:27 PM Reply Like
  • Manitobatex
    , contributor
    Comments (1228) | Send Message
     
    What do you call 500 million users ?
    Do you really think that "no one ever heard of it".
    Your comments magnify your inteligence.
    13 Mar 2014, 09:07 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (5167) | Send Message
     
    cashawash-
    Agree with your comment.
    However not to correct you, but I don't think the word is "jingoistic", I think the word you meant to use is "ignorant".
    8 Mar 2014, 05:32 PM Reply Like
  • dhoyle
    , contributor
    Comments (12) | Send Message
     
    Barrier to enter the texting app game? Zero. Whatsapp will be one of those stories nobody remembers except as an example of hubris at a market top. Facebook is going to make money because they are a monopoly now, like the old ATT. But the growth phase is going to decelerate until the market no longer cares. Eventually it will slowly wither and die as new technologies for storing photos and communicating with family emerges. Facebook is like Amazon, not Google.
    13 Mar 2014, 11:22 PM Reply Like
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