For info: Market Capitalization for
SONY = $17.71 billion
Source: The Wall Street Journal
Subject: Facebook to Pay $19 Billion for WhatsApp
Messaging Startup to Operate Independently, Retain Brand
Facebook Inc. agreed to buy messaging company WhatsApp for $19 billion in cash and stock, a blockbuster transaction that dwarfs the already sky-high prices that other startups have been able to recently command.
The 55-employee company, which acts as a kind of replacement for text messaging, has seen its use more than double in the past nine months to 450 million monthly users. That makes its service more popular than Twitter Inc., the widely used microblogging service which has about 240 million users and is currently valued at about $30 billion.
The transaction, which includes $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees over four years, ranks as the largest-ever purchase of a company backed by venture capital.
Besides making its founders billionaires, the deal marks an enormous windfall for Sequoia Capital, the only venture firm that backed WhatsApp. Sequoia invested about $60 million for a stake valued at up to $3 billion in the deal, according to a person familiar with the matter.
The deal price also easily outranks any acquisition of startups in recent years, including Facebook’s purchase of photo-sharing app Instagram for more than $1 billion in 2012, and, a year earlier, Microsoft Corp.’s $8.5 billion buy of video-calling company Skype.
What isn’t clear is how much revenue WhatsApp makes—the company declined to comment on its sales. It charges 99 cents a year after one year of free use and doesn’t carry ads. On a conference call, Facebook Chief Executive Mark Zuckerberg said he doesn’t think ads are the right way to monetize messaging systems.
Beyond revenue, the deal could help shelter the social network against the shifting tastes of teen users, some of whom have grown cool to it, and bolster its position internationally. WhatsApp is particularly popular outside of the U.S.
The transaction comes in the wake of Facebook’s failed attempt to purchase another messaging service popular with younger users, Snapchat, for roughly $3 billion last year. Read the rest of this entry »