Apple Inc., Not Facebook Inc, Should Have Purchased WhatsApp [REPORT]

Apple Inc. (NASDAQ:AAPL) is sitting on a cash pile of about $160 billion. And Facebook Inc (NASDAQ:FB) went on to acquire WhatsApp for $19 billion, which might have served the iPhone maker very well. The social networking company has agreed to pay $3 billion in restricted stock, $4 billion in cash and $12 billion in stock. WhatsApp has more than 450 million users worldwide, and it’s adding more than 1 million new ones every day. That’s why Mark Zuckerberg is so optimistic that WhatsApp will soon have more than 1 billion users.

Apple Zuckerberg

New Apple products unlikely to be revolutionary like iPhone

BTIG analyst Rich Greenfield told CNBC that, with the acquisition of WhatsApp, Facebook Inc (NASDAQ:FB) will get a big chunk of time users spend on mobile devices around the world. WhatsApp has a very high level of user engagement, so the combined strength of Facebook, Instagram and WhatsApp will make Zuckerberg the Goliath of social networking.

Coming back to Apple Inc. (NASDAQ:AAPL), Jon Najarian of optionMONSTER said that the tech giant has a stealth bomber, but it’s still using slingshots. The company should have been there, knocking on the door of WhatsApp with a lucrative offer. Google Inc (NASDAQ:GOOG) was reportedly also in the race to buy the messaging company. Yesterday, Barclays analyst Ben Reitzes downgraded the iPhone maker’s rating to Neutral from Overweight. The research firm said that the tech giant’s new products such as TV, smartwatch and payment service may provide some upside, but they won’t be revolutionary like iPhone and iPad. Reitzes forecasts Apple shares to remain range-bound at least through the next year.

Apple has to get into social

Apple Inc. (NASDAQ:AAPL)’s iTunes marketplace has more than 600 million loyal users that pay the company for stuff. Jon Najarian thinks Apple could be Facebook Inc (NASDAQ:FB), or it could be Netflix, Inc. (NASDAQ:NFLX). But it’s not aggressive at all when it comes to growing the user base that pays them for apps, content and services. Apple’s “ancient” board is not aggressive, and it’s letting Tim Cook simply sit there and “twiddle” his thumbs. Of course, paying $19 billion might have been a bit too much. But then that’s the cost of being too late to the growth race.

Najarian said Apple Inc. (NASDAQ:AAPL) has to make a move in social to explore the growth opportunities. Otherwise, it risks becoming the next Microsoft Corporation (NASDAQ:MSFT).

  • Jonahstein

    Apple shouldn’t consider buying WhatsApp unless they were ready to enter the Android Apps space. Even then, it is a silly deal. it ONLY made sense to Facebook because they were threatened by WhatsApp stealing mobile engagement time and possibly owning the One-to-One and Many-to-Many communication space.

    If Apple really wanted to grow their content/services revenue they could extend iMessage, Facetime and iTunes to 1.5 Billion Android users.

    That would cost a lot less than $19 Billion and create viable competitor to WhatsApp and position Apple for a social play.

  • cis

    Not degrading anywhere; and CM just reported record sales on the addition of AAPL for January. Better re read the news in China. February will be a Tsunami.

  • Mike.R.

    Ahem…and Apple is not in crisis, where even China Mobile barely had an effect on its stagnant sales numbers and continuously-degrading global market share?

  • Mark Velazquez

    Everyone knows how I feel about Apple…yet this would have made no sense for Apple or Google. They both did the right thing by avoiding a company that generated 23 mill last year. Facebook is in for a major stock write off… Both Apple and Google could build a whatsapp overnight without the need to spend 19B.

  • cis

    More inane suggestions.
    WhatsApp @ $19B with 0 justification for the price. Or Tesla; with cutting edge technology at the forefront of EV evolution at $24B
    Now….you tell me what is better spent money?