Facebook revealed the calculations behind the massive acquisition price for the first time
Facebook has revealed a little more about what compelled it to spend close to $US19 billion (AUD$21.6bn) earlier this year to buy mobile messaging service WhatsApp - a deal that had many scratching their heads at the huge sum.
Roughly $US15.3 billion of the price Facebook paid is attributed to "goodwill", according to a filing with the US Securities and Exchange Commission.
Goodwill, in business accounting parlance, generally refers to the excess in the purchase price of a company that cannot be attributed to any income producing businesses or tangible assets. In this case, it seems to represent what Facebook deems to be WhatsApp's potential future value.
The $US15 billion could be attributed to "expected synergies from future growth, from potential monetisation opportunities, from strategic advantages provided in the mobile ecosystem and from expansion of our mobile messaging offerings," Facebook said in the SEC filing.
The other line items breaking out WhatsApp's value are: $US2 billion for its users; $US448 million for the trade name; $US288 million for its technology; and $US21 million for "other" items, according to the filing.
$US15 billion in goodwill value certainly is, for now, intangible - WhatsApp generated a net loss of $US138 million in 2013, the filing said. Sales were a meager $US10 million, compared to Facebook's $US7.87 billion for the year.
Facebook's plans for making money on WhatsApp and growing the service are a longer term play possibly five years away, Facebook CEO Mark Zuckerberg said during a conference call with analysts on Tuesday.
WhatsApp likely has at least 600 million monthly active users, judging from a tweet posted in August by CEO Jan Koum. Facebook now has 1.35 billion users who log in monthly, it reported Tuesday.
Facebook's acquisition of WhatsApp officially closed earlier this month. As of closing the deal was worth around $US21.8 billion total, due to the higher value of Facebook's stock compared to its value at the time of sale.
Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com
A study published in The Harvard Business Review found the time spent in collaborative activities at work has increased by over 50 per cent in the past two decades. Larger projects; complicated problems; tighter timeframes: These require bigger teams with specialised skillsets and diverse backgrounds, often dispersed globally.
In 2018, only 21 per cent of customers believed that banks in general had their customers best interests at heart and behave ethically. Only 26 per cent believed that banks will keep their promises; views cemented further following the Hayne Financial Services Royal Commission.
Taking people on an emotional journey through content is the most critical part of being a publisher. Which is why emotion lies at the heart of VICE Media.
In this bonus last episode of this new podcast series, BrandHook MD, Pip Stocks, talks with former ANZ group general manager of marketing, Louise Eyres, talks about the importance of thinking like a customer and using intuition to solve customer painpoints.
It's a pretty good idea. I think this integration is useful. Don't you agree?
Misty Stoll
Officeworks hops on voice interface bandwagon with Google Assistant integration
ok. so no RCS support? by the way, RCS is a lot bigger than 5G in terms of marketing and monetisation so y'all should be covering it.
DragoCubed
Optus goes for education with 5G network campaign
Many companies and individual merchants have shifted their major part of marketing to web marketing services Portland as it weighs fewer ...
Radiata Solutions
6 Ways to ramp up Social Media to Your Web Design
This is a unique experience! Will be interesting to talk to their managers.
Joyce Harris
How Krispy Kreme revitalised its brand in a saturated market
I feel bad for them. It's a shame they are closed now. What do you think about it?
Lisa Deleon
Dick Smith stores set to all close by 30 April