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Facebook Did Well To Purchase Instagram: Wells Fargo

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Facebook Did Well To Purchase Instagram: Wells Fargo

The social networker, Facebook Inc (NASDAQ:FB) announced the successful completion of its acquisition of social photo-sharing site Instagram, last week. The deal was announced earlier to be of approximately $1B in cash and stock. The report from Wells Fargo & Company (NYSE:WFC) views it a good combination, given that “Photo sharing was an early feature for Facebook Inc (NASDAQ:FB), and remains one of its most popular applications” and Instagram was generating high user growth through its mobile app. Though Instagram will continue to operate under its own brand, Facebook Inc (NASDAQ:FB) will benefit from its various features, including “better mobile experience, easier sharing, and group photo upload capabilities.” Facebook Inc (NASDAQ:FB) also filed 8-K last week regarding the steps that the company had taken to minimize the impact of upcoming share vesting, which includes “cash payment of outstanding stock-related tax obligations and voluntary restrictions on executive vesting.” The report sees it as a positive move from the company, as “additional share dilution could have proven detrimental in the near term” and currently the company has enough liquidity to manage their affairs.

Nokia Corporation (NYSE:NOK) recently announced that it will soon launch a free music streaming service with no registration required for owners of the Windows based Lumia phones. After this announcement, there were widely published rumors that Apple Inc. could also come up with a similar services, such rumors adversely affected Pandora shares. According to a research report from Wells Fargo this won’t be a good idea from Apple, “particularly if it only ran on Apple devices.” The research says such services should cover a mass audience and wide range of computing devices, automobiles, and other consumer electronics products, as Pandora does now. The report from Wells Fargo views Spotify to be a more direct competitor to Apple Inc. (NASDAQ:AAPL), as many users subscribe to their music for $9.99 per month, against purchasing a song or album. Also Pandora does offer its users the ability to purchase through iTunes.

Last week also witnessed release of several new versions of Kindle and eReader tablets from Amazon.com, Inc. (NASDAQ:AMZN).  The online retailer stretched its tablet line with the introduction of an 8.9” Kindle Fire HD with 4G LTE and Wi-Fi for $499, an 8.9” Fire HD with Wi-Fi for $299, and a 7” Kindle Fire HD with Wi-Fi priced at $199. Amazon also introduced newer versions of its readers called the ‘Paperwhite’, with higher resolution, better contrast, touch display, and built in lighting for night reading. The research report views Amazon as a possible threat to other players in the device market, and notes that they may “threaten the long held leadership of Apple.”

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