IPFS News Link • Internet
IPFS News Link • Internet
The first (which has attracted tremendous attention), is Facebook’s
blockbuster $19 billion acquisition of instant messaging provider
WhatsApp. The second (which few have noticed) is the horrific earnings
report issued by Texas-based retail chain Conn’s. While these two
developments don’t seem to have much in common, together they shed some
very unflattering light on where we stand economically.
Given the size and extravagance of the Facebook deal, it may go down
as one of those transactions that define an era (think AOL and Time
Warner). Facebook paid $19 billion for a company with just 55 employees,
little name recognition, negligible revenues, and little prospects to
earn much in the future. For the same money the company could have
bought American Airlines and Dunkin’ Donuts, and still have had $2
billion left over for R&D. Alternatively they could have used the
money to lock in more than $1 billion in annual revenue through an
acquisition of any one of the numerous large cap oil producing
partnerships. Instead they chose a company that is in the business of
giving away a valuable service for free. Come again?