Facebook is rich and has money to burn. Why not spend it on odd acquisitions?
The fight over the questionable value of social networks, fueled by the upcoming IPO of Facebook, got a boost as Facebook made a billion dollar acquisition. The company it bought–Instagram– is a maker of a popular photo-sharing app for mobile phones. It seems a number of other products do the same thing. Apple’s (NASDAQ: AAPL) iPhone is set up to accommodate similar features.
But, Facebook has been sharply criticized for its lack of a model to make money on mobile devices. Some experts believe this trouble argues against a $100 billion value for the company which has 900 million users around the world. Other online firms, led by Google (NASDAQ: GOOG), make significant amounts of money with their smartphone applications. Even if Facebook wants to gain ground in the portable device business, $1 billion is a huge amount to spend for a firm which has 30 million users and next to no sales.