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
In the third and final episode of our 3-part CMO50 video series exploring modern marketing and why it’s become a matter of trust, we’re delighted to be joined by Telstra’s former CMO and now digital services and sales executive, Jeremy Nicholas, and Adobe VP Marketing Asia-Pacific and Japan, Duncan Egan.
Flash back to the classic film, Willy Wonka and the Chocolate Factory. Television-obsessed Mike insists on becoming the first person to be ‘sent by Wonkavision’, dematerialising on one end, pixel by pixel, and materialising in another space. His cinematic dreams are realised thanks to rash decisions as he is shrunken down to fit the digital universe, followed by a trip to the taffy puller to return to normal size.
Why is it there is no shortage of leadership development materials, yet outstanding leadership is so rare? Despite having access to so many leadership principles, tools, systems and processes, why is it so hard to develop and improve as a leader?
As a nation united by sport, brands are beginning to learn money alone won’t talk without aligned values and action. If recent events with major leagues and their players have shown us anything, it’s the next generation of athletes are standing by what they believe in – and they won’t let their values be superseded by money.