Menu
Facebook: $US15 billion of WhatsApp's value is based on what it could be

Facebook: $US15 billion of WhatsApp's value is based on what it could be

Facebook revealed the calculations behind the massive acquisition price for the first time

WhatsApp on iOS

WhatsApp on iOS

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

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesInternet-based applications and servicesWhatsAppsocial mediainternetMergers and acquisitionsFacebook

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments