While Facebook Inc (NASDAQ:FB)’s stock hit a new low on Tuesday, closing at $28.84, it hasn’t stopped the company from shopping. The company, which is still dealing with the disastrous IPO has been on a spree recently. Facebook Inc (NASDAQ:FB) purchased instagram for $1billion, despite revenue being zero.
Recently it was rumored that Facebook Inc (NASDAQ:FB) would enter the Mobile phone market, and would purchase Face.com for $100 million. There are no details yet about how much it would costFacebook Inc (NASDAQ:FB) to enter the mobile phone market, but it would likely run in the billions. Additionally, there are no details on revenue of Face.com, but based on Instagram, it wouldn’t be surprising if it too were zero.
Facebook seems to be adapting a similar strategy to Microsoft Corporation (NASDAQ:MSFT). Purchase anything possible for an absurd valuation, i.e. Skype, and in hindsight Yahoo! Inc (NASDAQ:YHOO). Now Facebook seems to be going a step-ahead of Microsoft.
On Facebook’s rumored to-buy list is Norway’s mobile browser maker OPERA SOFTWARE ASA (PINK:OPESF). Coming under pressure to make money from the rising number of Facebook users who access its site from mobiles, this could be a good fit for the troubled company.
Shares in Opera jumped as high as 26 percent on Tuesday from the news. Technology blogs have been busy writing that Facebook is a possible suitor after receiving criticism at the time of its IPO that it didn’t have an “effective mobile advertising strategy” reported Reuters.
So what does Opera bring to the table? Its Internet browser makes the most out of surfing on mobiles including cell phones, tablets, PCs and TVs; for those without a smartphone this can be a challenging experience but it is very popular in emerging markets.
The company supposedly has had its For Sale sign up informally for awhile, but they have said no to companies such as Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO).
Of Opera’s current status, one banker said to Reuters, “The company has been available for a long time. Informally it is for sale. And Facebook wants to buy its way into the emerging markets.”
Another source has said that interest from a third party could either result in closer partnerships or an Opera takeover. He said, “Opera is attracting growing interest as mobile becomes more strategic for Internet companies, but there is no ‘For Sale’ sign up over the company.
For now, partnerships with numerous companies such as Google has benefited Opera but with a takeover by Facebook, it could stir the pot.
The source added, “It’s a classic challenge for a company like this. They’re like the Switzerland of mobile. Someone would have to derive meaningful value to take them off of that independent path.”
Facebook is approaching the overload point with members from the developed world and believes the future of its users will come from such countries as India and Nigeria.
Because many in these markets just own basic phones and do not have the access to app stores, Facebook will need to have the experience of accessing its site through a Web browser an easy one.
In February, Bret Taylor, chief technology officer for Facebook, said that the company would move for improved Web standards that would allow additional apps to be delivered through a simple Internet browser, rather than through Apple and Google stores.
A second banker said to Reuters this makes sense. He said, “On paper (a Facebook-Opera combination) is a good story. Opera’s browser is used in feature phones, not smartphones, mainly in the emerging markets.”
Opera, with its 200 million subscribers to its Mobile and Mini services, has developed a large share in emerging markets including India and Brazil; for Facebook, these are key growth markets.
How much would Facebook have to spend?
DNB, Norway’s top bank, believes it Opera’s price would have to double from Friday’s closing price of 68.6 crowns; this gives the company a $1.35 billion value. Danske Bank and ABG Sundal Collier have estimated 50 to 60 crowns per share price or $1 billion to $1.2 billion.
Arctic Securities said to Reuters, “Opera would be sensible for Facebook on several levels. It would enhance the now limited mobile experience of Facebook, improve Facebook’s mobile monetization problem, help Facebook retain online game developers leaving the social network over the lack of a mobile platform and further improve Facebook’s ability to target ads.”
Opera’s software is available on many smartphones such as Apple’s iPhone and Research in Motion’s BlackBerry. It functions on various operating systems, such as Google’s Android; this would give Opera the expansion that Facebook wants.
Need the Founder to Come On Board
But one hurdle that Facbook may need to overcome is Opera’s founder and top shareholder, Jon S. Von Tetzchner. He’d like the company to grow organcially. He holds 10.9 percent of Opera’s stock.
He said to Reuters, “I want Opera to focus on growth and delivering good results; there are big opportunities for Opera. We have been promised 500 million users by 2013, and I think that’s a good goal and the firm should keep going for it.”
He then added, “I personally think that an ARPU (average revenue per user) goal of $1 is even modest. I am not pushing for a takeover.”
Tetzchner has said he was unaware of any bid and isn’t sure how he’d react if there was one.
What About Developing A Smartphone?
Meanwhile, Facebook is also rumored to be developing a smartphone. We reported the story earlier based on a NYTimes article that detailed Facebooks’ hiring of at least six ex-Apple engineers with experience working on the iPhone and iPad.
The rumors of a Facebook smartphone have hit the Internet before and they haven’t turned out to be true. Maybe it will be different this time with the experienced staff. But the question is, should Facebook build the phone, what will they do to make it unique and competitive?
And gaina let’s not forget about Facebook’s Instagram purchase and rumors of Face.com purchase. When will it be enough or is Facebook just a spoiled child that wants too many toys?