Boston, MA 02/25/2014 (wallstreetpr) – The biggest headline grabbing eyeballs and which has caught everyone’s undivided attention since last few days is acquisition of Whatsapp Messenger by Facebook Inc. (NASDAQ:FB). This acquisition has given the investors of Facebook a reason to rejoice however the reaction of users of WhatsApp messenger to this deal has ranged from ecstasy to absolute disappointment fearing the future changes which shall take place due to this deal.
Facebook’s acquisition strategy
WhatsApp messenger which is proprietary instant messaging service for smartphones and which has around 450 million users per month worldwide was acquired by Facebook Inc. (NASDAQ:FB) for a cool price of $19 billion. Facebook has agreed to pay WhatsApp founders $4billion in cash, $16 billion in Facebook’s shares and $3 billion in restricted stock units which shall be granted to WhatsApp founders and employees over a period of 4 years. However the price paid by Facebook Inc. (NASDAQ:FB) for acquiring WhatsApp has triggered a massive debate over how far is the price paid for this acquisition by Facebook is justified. Facebook’s CEO Mark Zuckerberg has said on record that WhatsApp Messenger is worth more than $19 billion and this acquisition is completely justified as it fits its company’s structure and future plans of expansion and diversification. However, many analysts opine that the price to be paid by Zuckerberg for this acquisition is very high and unreasonable as the total worth of Facebook’s assets are not anywhere around $19 billion thereby making this deal a highly costly and unaffordable affair for Facebook Inc. (NASDAQ:FB). WhatsApp co-founder and CEO, Jan Koum, has also been offered a seat in Facebook’s Board of Directors as part of this mega deal.
Facebook plans for WhatsApp
Facebook Inc. (NASDAQ:FB) has stated that it has acquired WhatsApp because both Facebook and WhatsApp aim at bringing more utility and connectivity to the world by delivering core internet services efficiently. Facebook’s acquisition of WhatsApp messenger will allow it to gain access to more than 600 million users in China where Facebook is banned since 2009 but where WhatsApp is widely available. Facebook’s entry into China via WhatsApp will provide it a chance to reach Chinese internet and mobile users which it could not have done on standalone basis. The only problem area for WhatsApp users is what would Facebook do with WhatsApp! Facebook may make WhatsApp chargeable which may mean trouble for WhatsApp users, furthermore, some analysts are of the opinion that given that Facebook earns a major chunk of its revenue from advertising Facebook Inc. (NASDAQ:FB) may very well use WhatsApp as a advertising platform for increasing its revenue which will not go down well with WhatsApp users as the belief of WhatsApp founders till now had been to earn revenue without advertising anything on their platform. It is a wait and watch game to see how does Facebook really plan on using WhatsApp for its own benefits and how far will WhatsApp change as a chatting platform under Facebook Inc. (NASDAQ:FB)’s leadership.
