WhatsApp: 2nd Biggest Tech Acquisition of All Time

Nerval's Lobster writes "Facebook CEO Mark Zuckerberg decided to drop a cool $16 billion on WhatsApp, a messaging service with 450 million users. It was a mind-boggling sum, even if you buy into Facebook's argument that WhatsApp (which will continue to operate as an independent subsidiary, at least for the moment) will soon connect a billion people around the world. But it wasn't the biggest tech acquisition of all time: that honor belongs to Hewlett-Packard, which bought Compaq for (an inflation-adjusted) $33.4 billion in 2001. Facebook's purchase of WhatsApp comes in second on the list, followed by Hewlett-Packard's purchase of Electronic Data Systems for $15.4 billion; Google's acquisition of Motorola Mobility for $13 billion, and Oracle snatching up Peoplesoft for $12.7 billion. In sixth comes Hewlett-Packard again, with its Autonomy buy in 2011 (for $11.7 billion), followed by Oracle's BEA Systems acquisition ($9.4 billion) and Microsoft seizing Skype ($9.0 billion). What do many of these highest-cost purchases have in common? Many of them didn't pan out. Hewlett-Packard's Compaq, Autonomy, and EDS acquisitions, for example, made all the sense in the world on paper, the tech giant eventually took significant write-downs on all three (Autonomy in particular was an outright disaster, resulting in a $8.8 billion write-off and widespread allegations of financial and management impropriety)." Update: 02/20 19:32 GMT by T : Of interest: Mother Jones has an interesting take on the seeming mismatch between Facebook's business model and the way the WhatsApp founders think about advertising. Hint: they hate it.

Comments

Re:CNN argues it's worth the money

[cheesybagel]

Skype? Hah. Remember ICQ?

The funny thing is Facebook bought for billions a company which makes software running over XMPP. THAT was pathetic.

Who needs advertising when you can sell the comp..

[xxxJonBoyxxx]

Who needs advertising when you can sell the company for $16B? They'll just punt the founders and add in-stream/in-text ads related to the content of the text streams the user recently engaged in. Done.

May be related

[gmuslera]

WhatsApp issues DMCA takedown notices against alternative clients shortly before the acquisition.

Re:CNN argues it's worth the money

[ceoyoyo]

I suspect many WhatsApp users have it free. I do. Anyone who used it before they "monetized" doesn't pay. If they change that, or if Facebook starts mucking with it, I'll use something else.

There are a LOT of free texting programs, and it takes about a weekend to write another one. Extracting sixteen billion dollars from WhatsApp is going to be an exercise in futility. Hopefully the WhatsApp people are laughing their way to the bank (and selling their FB stock as fast as they can).

Re:Facebook bought WhatsApp to kill it

[gurps_npc]

You are missing the fact that the telcos are not smart enough to make txt messaging free. They see it as a money maker, rather than a loss-leader.

Their entire philosophy is screwed up - charging people for things that should be free (leaving a contract) and giving away stuff that should cost money (smart phones).

They hope to confuse people and make money off of their stupidity, rather than to offer a simple, clear, fair deal and make money from intelligent choices.

Re:(Over valued)^2

[140Mandak262Jamuna]

Well, I was shooting for +1 funny, so did not rewrite it. But God being kind gave me +1 informative, and I now look silly.

Re:CNN argues it's worth the money

[Solandri]

The funny thing is Facebook bought for billions a company which makes software running over XMPP. THAT was pathetic.

They didn't pay $19 billion for the app. They paid for the userbase. From what I read it's about 450 million, which would make the purchase price about $42 per user. A little steep, but not outlandish in advertising terms. Now they have to figure out how to hang on to those users and grow the user base.