|Facebook demonstrates fake power with Instagram purchase|
Facebook is trying to persuade us that it costs much, after deciding to buy a small company, making it big with a $1 billion deal. The most interesting question now is where is the money for this investment? Obviously it is not the 2011 profit. Instead Mark Zuckerberg will pay with shares whose value no one yet knows.
When Facebook buys for $1billion a company with 13 employees, this is expected to mean that the value of Facebook is $230 billion with its 3000 hired at company. This is a joke of course. But such types of big as value acquisitions are usually made by more stable corporations with a guaranteed cash-flow and at least some time of stock exchange history.
I think this $1 billion for Instagram is a too big bite for a new on markets and not yet proven business as Facebook. Such types of adventurous decisions are risky and can lead to bad consequences for the entire business model. Yes, it is good to make you look big when making big purchases. But often big and thoughtless purchases just lead to losses and even worse...
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