Rumors are floating around about Facebook eyeing Norway based Opera for acquiring the leader in mobile browser. Rumors are also there that the deal could be around 1 billion USD. More rumors are coming up about Facebook attempting to acquire face.com, the Israel based facial-recognition company.
As my honest opinion, none of these acquisitions make sense for facebook.
Already reeling under price pressure - the Facebook stock has tanked to below $29 after the debut. Questions are being raised about the roles of lead managers and advisors about the valuations, especially the last minute hike in the IPO price. Questions are being raised about the 1 billion USD acquisition of instagram.
What is it that facebook is attempting to achieve now with another 2 such big acquisitions?
Facebook Acquition Target: Opera, Face.com? No, it doesn't make sense
Let's look at them one by one:
1) Opera - Norway based browser company, a market leader in mobile browsers.
Why facebook wants it? Why do they really need a browser?
Facebook's platform apparently is not geared up for mobile users, so they look for an existing leader in mobile browser and try to benefit from its lead position.
How will it happen? Nothing is clear. Possibly, facebook will try to customize it or tweak it to have it compatible for facebook access.
Whether it will work? No idea.
What is the competition? It's Everywhere. Right from Google Chrome to other mobile based browsers, there is no guarantee that people will be hooked onto facebook only through this opera browser.
2) Face.com - Israel based face recognition company
Why facebook wants it? Not really sure. Already have instagram on their side for photos. How will face.com help facebook - possibly recognizing the faces? Doesn't make much business sense.
Or are they only after the domain called face.com?
How will the deal benefit facebook - no idea. Don't see any benefit. Possibly, users can search for similar looking human beings? Search for twin siblings if lost? "How much I look like someone else" kind of games?
Instagram deal for facebook was already criticized by many analysts. I agree with them. Now, another of these 2 acquisitions are not going to help - only drain money out as they are at high cost without adding much value.
Let's look at the market sentiment also amid all these rumors and development news
- Facebook Options trading commenced yesterday and the very first day it saw a buildup indicating further fall in the facebook stock price
- The stock has been hammered consistently since its debut, touch intraday lows of below $29
- Questions being raised about the role of investment bankers about the valuations
- Questions being raised about the high cost instagram deal
- Rumors about a third attempt to build facebook smartphone (if true, what all is facebook trying to accomplish?)
It was a good IPO with a momentary good listing, but now Market Mood is low. It doesn't look like this will be a good move by Facebook