2. Facebook
Founded February 4, 2004
Headquarters Menlo Park, California, US
Founders Mark Zuckerberg
Eduardo Saverin
Andrew McCollum
Dustin Moskovitz
Chris Hughes
CEO Mark Zuckerberg
Revenue US$7.87 billion (2013)
Net income US$1.50 billion (2013)
Total assets US$17.89 billion (2013)
Facebook’s acquisition of WhatsApp
3. WhatsApp
Founded 2009
Headquarters Mountain View, California, US
Founders Jan Koum
Brian Acton
CEO Jan Koum
Type Instant messaging
License Proprietary
Facebook’s acquisition of WhatsApp
4. Facebook’s acquisition of WhatsApp
Total amount for acquisition - $19 Billion
or
INR 1158810036270
It includes:
• $4 billion in cash
• $12 billion worth of Facebook shares
• $3 billion in restricted stock units
Jan Koum to join as director of Facebook
6. It was a deal that surprised some, shocked many, and left some gaping at the wall in sheer amazement. This
is what Mark Zuckerberg did to the analysts of the financial world and to the general public when he
announced that Facebook had decided to buy 5-year old WhatsApp for a whopping 19 billion USD!
But WHY? Let’s have a look..
• 450 million users
• 70% active daily users
• 1 million new user registrations/day
Immense growth in a rapid fashion for
a firm that hardly employs 50 odd people!
How is it possible?
Thanks to WhatsApp’s powerful features:
• Rapid text messaging
• Engaging private and group chat options
• Quick file sharing
• Sleek user interface
• Minimum system requirements and data usage
• Freemium Model (free usage first year, $0.99 from
second year)
Facebook’s acquisition of WhatsApp
9. With the desktop market saturating and smartphone
clientele exponentially growing, Facebook has
been looking to establish a stronger presence in the
mobile market
FB App and Messenger reach limited to FB Users.
Only Moderate Successes.
Facebook was desperately looking for a turn-around
in the mobile segment
The 450 million “content” mobile users of WhatsApp
perfectly filled the void
Facebook’s acquisition of WhatsApp
11. Facebook earns majority of its revenues
from just US and Canada. WhatsApp will
now give it a good complementary
geographic presence.
By buying WhatsApp, Zuckerberg has
also kept Google out, a rival which had
also been courting WhatsApp for
possibly an even higher price!
Facebook’s acquisition of WhatsApp
12. Facebook’s acquisition of WhatsApp
DEAL VALUE – USER ANGLE
$42 $128 $80 $60
From the users point of view, $19 billion for 450 million users translates
to ~$42 per user, which is much lesser than the value of a Facebook
($128), Twitter ($80) or a LinkedIn user ($60).
So if the users of WhatsApp can be fairly relied on, the acquisition
value can be counted rational to an extent
13. Facebook’s acquisition of WhatsApp
DEAL VALUE – REVENUE ANGLE
Presently WhatsApp incurs only marginal expenses
in terms of:
• Marketing costs
• Infrastructure costs
• Employee costs
In terms of revenue, let us assume:
• Zuckerberg streamlines subscription system
• WhatsApp indeed reaches 1 billion users
If these assumptions hold true, WhatsApp can make
fairly good profits because of its low cost business
model
14. Facebook’s acquisition of WhatsApp
STRENGTHS
• Loyal customers
• Market share leadership
• Available for all platforms
• Strong management
• Low cost
• Brand name
WEAKNESSES
• Competitive market
• Lack of diversification
• Weak distribution network
• Only works with a data plan or WiFi
15. Facebook’s acquisition of WhatsApp
OPPORTUNITIES
• Increased demand for smartphones
• Recognition of the application
• Modernization of people
• Continued development of
technology platforms
• Advancement of technology
THREATS
• Competition
• Product substitution
• Similar applications and that too free
