Facebook and Whatsapp are two important and widely used social networks which are currently using by millions of users throughout the world. In the year 2014, the Chief Executive Officer (CEO) of Facebook announced the acquisition with Whatsapp for a sum amounted to US$ 19 Billion (Nagler, Ebner & Schön, 2015). Based on the case provided relating to the acquisition between Facebook and Whatsapp, there are certain questions that needed to be answered relating to the acquisition of Facebook and Whatsapp.
Agreeing With The Facebook Purchase
There are certain per-requisites that deem highly efficient and proactive from the viewpoint of an organization as far as engaging in an acquisition is concerned. These aspects are divided into two main forums which are financial aspects and strategic aspects (Rashidi & Vaniea, 2015). The financial aspect is the most important and valuable aspect that considers by an organization before the acquisition. Based on the financial outcome, I am not agreed with the purchase of Whatsapp by Facebook in the respective amount. The analysis on the basis of which this particular agreement is based are as follows.
Analysis OF Support Position
From the analysis, it is found that the strategic aspects associated with Whatsapp are absolutely fine. Whatsapp had 1 Million active users by the end of the year 2009, which were highly essential and perfect from their core standpoint. From the financial statement of Whatsapp for the year ended 2012 and 2013, it is clearly found that the financial performance of the company was very weak. Although, the revenue of the company increased tremendously in the year 2013 compared to the year 2012. The generated revenue in the year 2012 amounted to S3.82 Million which increased by 300 times in the year 2013 to reach on a level of $10.21 Million, showing a great capacity of the company in generating revenue. Nevertheless, the company has incorporated net loss in both of these financial years, regardless of the incremental revenues in both of the years. Whatsapp has reported a net loss of $ 54.66 Million in the year 2012 and $ 138.14 Million in the year 2013. The main reason behind the same loss is the total cost and expense which was way higher than the actually generated revenue of the company. It is assumed that the cost factor of the company will remain unstable in the future as well, and they have to work extremely hard to overcome the same issue.
Acceptance OF The Offer From Facebook
As a head header of Whatsapp, I always ready to accept the offer from Facebook. The offer that put forth on Facebook to acquire Whatsapp is high which is $ 19 Billion, which is way higher than the actual financial performance and income of the company. This particular aspect would be highly essential for Whatsapp in terms of their future, hence there would be no issue to the company to accept the offer given by Facebook to acquire the company, its assets and the shares which they have shared in the capital market.
Nagler, W., Ebner, M., & Schön, M. (2015, June). Why Facebook Swallowed WhatsApp!. In EdMedia: World Conference on Educational Media and Technology (pp. 1872-1881). Association for the Advancement of Computing in Education (AACE).
Rashidi, Y. & Vaniea, K., (2015). Poster: A user study of WhatsApp privacy settings among Arab users. In IEEE Symposium on Security and Privacy.