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

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AppleAAPL
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,
FacebookFB
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." 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 A) lured talent away from Apple or B) 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
.
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Related Link: LinkedIn Feared Google - But Not Facebook

That's one way WhatsApp could make back its money. But Eleni Marouli, an 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
last 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.
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Posted In: Analyst ColorNewsAnalyst RatingsTechInterviewAppleArvind BhatiaEleni MarouliFacebookIHS TechnologySterne AgeeTrip ChowdhryWhatsApp
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