Technology Stock Roundup: Facebook, Yahoo and Google Take a Tumble - Analyst Blog

Tech companies are now accompanied by lofty valuations and high expectations. So the slightest uncertainties lead to significant volatility. Last week was a case in point.  

Facebook Makes Another Expensive Acquisition

Facebook FB shares tanked last week after the social networking company spent $2 billion on Oculus, which makes a popular virtual reality VR headset called Rift. VR has captured people's imagination of late with gaming companies Sony SNE and Microsoft MSFT spurring the trend. While Sony has already launched its Project Morpheus, Microsoft's plans are reportedly in the developmental stage. Both these companies are interested in offering an enhanced experience for their game consoles.

Facebook's use for this futuristic technology is less obvious. But although the company says Oculus will run separately, Facebook integration seems to be an eventuality. But there has been great outrage among developers since the announcement and some have even melted away. That's because Facebook generates revenue by selling user data to advertisers and users naturally don't like this intrusiveness.

CEO Mark Zuckerberg maintains that VR is the next big computing platform after mobile, so Facebook needs to have a finger in the pie. Facebook intends to extend this functionality beyond games to real-world situations such as class rooms and games. The Rift offers the company a hardware platform to make this possible. So basically Facebook threw away a cool $2 billion on an experiment that may or may not be accepted by its users (note that the young and adventurous generally interact less with Facebook).

Google Stock to Split on Apr 3

In April 2012, Google GOOG had proposed a 2-for-1 stock split by creating non-voting Class C shares. Accordingly, it was proposed that a Class C share would be issued for each Class A and Class B share. Currently, Class A shares carry a single vote each while Class B shares, which do not trade and are owned by founders Brin and Page carry 10 votes each. The idea behind the creation of a non-voting class of shares was to prevent the dilution of the founders' control.

Unhappy shareholders took the matter to court, when the company agreed to two concessions. The first was that the founders would not sell any Class C shares unless they also sold an equal number of Class B shares. The second was an undertaking by Google to compensate Class C shareholders for differences in Class C and Class A share prices during the first year of trading. Since Google is a part of major indexes, some volatility in share prices may be expected.

Yahoo Japan Buys Telco eAccess for $3.2 Billion

Yahoo YHOO shares dropped again last week, as concerns regarding the core business hung heavy. But positive news flow continued with its 35%-owned Yahoo Japan picking up telecom company eAccess from Softbank.

The acquisition is essentially a reshuffling of Softbank's assets, which owns 43% of Yahoo Japan. But Yahoo gains because the eAccess broadband service will now be rebranded Y! Mobile and will also deliver voice services. Yahoo also gains access to its 4.4 million broadband customers and 5.7 million hosting customers (through the Willcom acquisition). Also part of the acquisition is 3,000 eAccess stores that can now be used to cross-sell Yahoo Premium services.

Other stories you may have missed-

Apple Would Like Comcast Favor: Apple AAPL is in talks with Comcast, which if successful, would allow its set top boxes to circumvent congestion at the last mile. What Apple is offering for the preferential treatment remains under wraps, but such an agreement would likely attract regulatory scrutiny (the FCC is already working on net-neutrality guidelines).  

Employee Wage Fixing at Tech Companies: Facebook COO Sheryl Sandberg has issued a statement in court, swearing that the company did not have a no-poaching agreement with Google. Silicon Valley employees have filed a class action lawsuit claiming that tech companies agreed between themselves not to hire each other's employees, which tended to reduce their employment opportunities and wage rates. Companies like Apple, Google, Intel INTC and Adobe were some of the companies charged in the lawsuit.

Cisco (CSCO) Takes to the Clouds

Intel Closes Basis Acquisition

Windows Azure to Be Microsoft Azure: Media reports indicate that Microsoft will soon rebrand Azure, since it is a multi-platform service and not limited to Windows alone. While Microsoft has not said anything about the death of Windows, it seems to be en route to making the rest of the business independent of it. 

Google Reclaims the Crown: Everyone cheered for Yahoo when it overtook Google as the most visited property on desktops. But comScore's latest data indicates that Google took less than a year to reclaim the number one spot, recording the largest number of unique visitors. Granted that most of Yahoo's focus is currently on mobile where it is also seeing greater success, but no one cedes ground without a struggle. So it does look like Yahoo's core business is hurting. 

Tech Companies Can Read Your Mail: Microsoft agreeing that it broke into a French blogger's mail to identify the employee that released sensitive information to the blogger has opened a can of worms. When challenged on the grounds of privacy, Microsoft said that it was authorized by the terms of agreement to read email in exceptional circumstances. It now appears that other tech companies like Apple, Google and Yahoo also have similar clauses in the agreements that most users accept without reading.

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