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Apple Developers Could Have Saved Facebook $19 Billion - Here's How

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Apple (NASDAQ: AAPL) typically hires or acquires talent and builds innovative technology from within the company.

Other tech companies might wish they had done the same.

Earlier this year, Facebook (NASDAQ: FB) paid roughly $19 billion to acquire WhatsApp. Global Equities Research analyst Trip Chowdhry now believes that may have been a mistake.

"I think [WWDC] is a wakeup call," Chowdhry told Benzinga. "If you saw what Apple announced [this week], it was WhatsApp plus three steps forward. Basically, you could do all the features that WhatsApp had, but you're not limited to just your phone."

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Chowdhry estimated that Apple pulled this off in no more than six to eight weeks -- possibly less.

"The message here is, the acquisition that was touted by people (including myself) as a phenomenal acquisition, but the shelf life of appreciating that acquisition was only six weeks," Chowdhry added. "Something that Facebook paid $19 billion for was probably worth not more than $200 million. That is one message that came from WWDC."

In other words, Facebook could have saved $19 billion if it had attracted new developers capable of building such an app or used its existing development teams to build a WhatsApp-style service from scratch.

More Than A Service

Despite the negative sentiment, WhatsApp could still prove to be a valuable acquisition.

Facebook didn't simply buy the company to expand its messaging capabilities. The company is believed to have wanted WhatsApp to reach new markets and to gain access to its massive pool of consumer data.

"Imagine when they have a billion users and they're charging $1 per user per year, you could be looking at a billion dollars in revenue, [and] most of that's gonna be profit," Sterne Agee analyst Arvind Bhatia told Benzinga.

That's one way WhatsApp could make back its money. But Eleni Marouli, senior advertising analyst at IHS Technology, thinks that Facebook might eliminate the annual fee to attract new users.

"They just want user growth," Marouli told Benzinga in February. "In order to increase its user growth, they might scrap the fee."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Apple Arvind Bhatia comments Eleni Marouli Facebook IHS TechnologyAnalyst Color Tech Best of Benzinga

 

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