

Facebook conference call about acquiring Oculus - ihuman
https://soundcloud.com/highway62/internal-facebook-conference

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JumpCrisscross
Facebook missed mobile. This was a concern pre- and immediately post-IPO. It
took an engineering overhaul and tens of billions of dollars in acquisitions
to bridge the gap.

The Occulus VR acquisition looks like Facebook hedging its bets with the
future of consumer computing UX. Better $2 billion and, say, $200 million a
year for ten years today than $19 billion tomorrow. Or so it seems he is
thinking.

Still, I like to check the math. Occulus VR says it has sold 75 000
"development kits" [1]. It has been 1 year and 7 months since August 2012 [2],
when Occulus VR began selling its development kits. Let's assume a 200% YoY
2013 growth rate - that means 56 000 kits were sold in 2013. Let's say these
keep selling at the $350 the Developer Kit 2 goes for [3]. That's $20 million
in 2013 revenues. Let's turn that into $2 million of profits - a 10% margin.

Let's value Occulus VR as if it were a growing perpetuity. If Facebook had a
cost of capital of {10%, 20%, 30%}, Occulus VR free cash flow (FCF) would have
to grow at least {10%, 20%, 30%} a year. Otherwise, its $2 billion price tag
would not make sense.

Companies are not immortal. Let's value Occulus VR as a 20-year growing
annuity. Setting Facebook's cost of capital at {10%, 20%, 30%}, Occulus VR's
FCF would have to grow at least {45%, 58%, 71%} a year.

Not a bad deal.

[1] [http://www.oculusvr.com/blog/oculus-joins-
facebook/](http://www.oculusvr.com/blog/oculus-joins-facebook/)

[2]
[http://en.wikipedia.org/wiki/Oculus_Rift#History](http://en.wikipedia.org/wiki/Oculus_Rift#History)

[3] [https://www.oculusvr.com/order/](https://www.oculusvr.com/order/)

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epistasis
>It took an engineering overhaul and tens of billions of dollars to bridge the
gap.

Tens of billions of dollars for Facebook's mobile efforts?

~~~
jdp23
$19B for WhatsApp

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shravan
This isn't actually an internal call. Sounds like a standard investor
conference call.[1]

[1]:
[http://investor.fb.com/releasedetail.cfm?ReleaseID=835447](http://investor.fb.com/releasedetail.cfm?ReleaseID=835447)

~~~
ihuman
It is. I wanted to use that as the submission title, but I had to use the
uploader's title instead due to HN title guidelines.

~~~
jpeg_hero
Do you have 1,000 karma?

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scintill76
Do the 1k people have special privileges in this area?

The guidelines say the title can be changed if the original is misleading,
which would seem to apply here.

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primitivesuave
I doubt the upvoters of this actually listened to it. It seems like when there
is a big acquisition, people make it a point to cover the front page with
relevant information, even when it's something with very little substance like
an internal conference call.

~~~
psbp
It's still important to feel your stomach churn when you hear Zuckerberg talk
about his "mission"

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deletes
Sound like an announcement to the shareholders via a large conference call,
not an internal discussion.

~~~
Maxious
Yep
[http://www.shareholder.com/visitors/event/build3/stage/stage...](http://www.shareholder.com/visitors/event/build3/stage/stage.cfm?mediaid=63723&mediauserid=0)

Best quote from Zuck: "We're clearly not a hardware company. We're not gonna
try to make a profit off of the devices long term. We view this as a software
and services thing, where if we can make it so that this becomes a network
where people can be communicating and buying things and virtual goods, and
there might be advertising in the world, but we need to figure that out down
the line."

~~~
lugg
Shit so it just hit me what the end game is with this (I know should have been
obvious.) Was kinda confused before thanks.

Caprica holobands here we come...

[http://caprica.wikia.com/wiki/Holoband](http://caprica.wikia.com/wiki/Holoband)

~~~
prawn
It's a VR social network, also with tie-ins to be used by educators and so on.

I think I'd prefer if the ultimate VR social network was actually open source
and decentralised if possible.

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BorisMelnik
Sounds more like a pre-recorded greeting than a "conference call." Conference
calls in our company sounds kind of like a huge argument at any given time.

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anigbrowl
Excellent find, thank you.

~~~
rabbyte
Is it? I listened to about 10 minutes and couldn't figure out why I would
listen to that. This isn't a scandal. I'm not sure why we're reviewing the
tapes now.

~~~
anigbrowl
I'm interested in how they pitch it to their staff/investors as a guide to
where Zuckerberg intends to take the company. I agree investor conference
calls are tedious to listen to but then SEC filings and annual reports are
also boring unless you are interested in analyzing a firm.

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Istof
Sounds like an ad ...

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benbojangles
good to know I have nothing to fear.

