Earlier quoted context omitted.
15254346
17876045
Screw all you guys and your good memories, why can't I remember mine? :P
America Online to Buy Internet Chat Service for $287 Million (1998)
111–120 of 145 posts
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#112Earlier quoted context omitted.
Google earned about $12B on revenue of ~$60B in the 2013 financial year, and trades at $404B. That's 33 times earnings, and Google isn't growing at 70% a year. 400 million users * $1/year = $400m/year, but WhatsApp's expenses look pretty low. Say earnings of 200m/year $200m * 33 = ~$6B. That 70% growth rate makes all the difference.
On the other hand, Google is investing massively in "next big thing" r&d, and even if all its efforts to create new markets fail, it's likely to still be a major player in adtech in 33 years time. WhatsApp has staggering growth on the basis you don't have to pay for it and its founders are hostile towards advertising, neither of which lend you towards thinking it'll ever reach the 33x P/E ratio ( actual P/E ratio >80…
Err..
Not sure where to start. What you say isn't even wrong, exactly.
1) You seem to think that the price/earnings ratio has something to do with how the company will do in (P/E) years. It doesn't. As a specific example, companies that are takeover targets have higher PE ratios than they would otherwise, even though they probably won't exist soon.
2) Generally companies with high growth trade at high PE ratios. That's why Google has such a high ratio (it's unclear if you understand this). WhatsApp has even higher growth. AFAIK WhatsApp's revenue is not publicly known, and I'm estimating it at $200m for next year[1].
3) Where are you getting "actual P/E ratio >800"? You know WhatsApp's revenue?
Edit: I see WhatsApp revenue was $20M last year[2]. With growth rates like they are seeing I don't think this says much other than that the revenue model works.
[1] Forbes estimates it at $400M, so I'm being conservative: http://www.forbes.com/sites/hollymagister/2014/02/21/whatsap...
[2] http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-...
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#113Earlier quoted context omitted.
17876045
Screw all you guys and your good memories, why can't I remember mine? :P
I remember when switching from ICQ to Microsoft Messenger thinking "good riddance". Messenger employed the not the least bit novel approach of letting users sign in using a self selected textual screen name.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#114Earlier quoted context omitted.
It makes $20 million in revenue . I've read that they're profitable, but never the number.
32 employees * 100,000 = 3.2 million Let's say a million a year for office space and another million for infrastructure and bandwidth, seems like they were fairly profitable for what they had. No idea how Facebook plans to recoup $20 billion though.
Not with charging $1 a pop, that's for sure.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#115Earlier quoted context omitted.
If you can call a P/E of 800+ "very profitable"? Making $20M a year profit is no small thing at all, and I'm sure if it was bought for a billion, you'd see far less comments on the subject.
It makes $20 million in revenue . I've read that they're profitable, but never the number.
Goes to show that only 20 Million out of 430M paid the $1/year (which has something to do with it not being charged everywhere and people having a 1 year grace period and a majority of their target market having no credit card (young audience in emerging markets)).
Let's see how Zuckerberg plans to change that drastically.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#116Someone mentioned about trying to find out if their have ever been any other chat services that have really made a lot of money on it's own, and it sparked memory of an acquisition that didn't happen quite that long ago, Microsoft buying Skype in 2011, and here is a good recent article about it: http://www.theguardian.com/technology/2013/aug/30/skype-micr... The bullet point that stands out for me is this: • Problems…
Is it insane to speculate that pressure is coming from government agencies? In a talk at Fosdem Poul-Henning Kamp talks about the pretty insane timeline with skype and how much it potentially benefited the NSA.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#117Earlier quoted context omitted.
Big difference: Skype had many more than the handful of employees needed to run WhatsApp. Their cost base was hundreds of millions. WhatsApp seems to run lean and mean, and that makes a big difference in terms of keeping it profitable.
This is slightly misleading in that a business with no revenues doesn/t have that much work to do.
WhatsApp didn't have "no revenue", they had a much simpler revenue stream.. But your point stands. No doubt a lot of Skype's operation costs were the business and marketing side of things.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#11840979067. I don't even know how I remember. I haven't used ICQ for 15 years.
3333801 - actually managed to login. Wow...
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#119Someone mentioned about trying to find out if their have ever been any other chat services that have really made a lot of money on it's own, and it sparked memory of an acquisition that didn't happen quite that long ago, Microsoft buying Skype in 2011, and here is a good recent article about it: http://www.theguardian.com/technology/2013/aug/30/skype-micr... The bullet point that stands out for me is this: • Problems…
One thing many people failed to take into account in the skype deal was that was cash sitting in overseas accounts and had microsoft repatriated those funds they would have been hit with a 30% tax or something on them. By buying an overseas asset they effectively got a huge discount on their money.
Re: America Online to Buy Internet Chat Service for $287 Million (1998)
#120Someone mentioned about trying to find out if their have ever been any other chat services that have really made a lot of money on it's own, and it sparked memory of an acquisition that didn't happen quite that long ago, Microsoft buying Skype in 2011, and here is a good recent article about it: http://www.theguardian.com/technology/2013/aug/30/skype-micr... The bullet point that stands out for me is this: • Problems…
Speculation - pure and simple. its an easy sell at the moment to executives and financial types who don't understand how computers work. The reality is that all these services (just like icq) are simple to replace and will only become moreso. if you try to make more than a trickle of income users will turn away. it won't pan out long term for many of these big purchases.