

Facebook buys Oculus VR for $2 billion - forgingahead
http://online.wsj.com/news/articles/SB10001424052702303949704579461812019189626

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forgingahead
If it is paywalled for anyone:

Facebook Inc. agreed to to pay nearly $2 billion in cash and stock to acquire
virtual reality goggle maker Oculus VR Inc.

Facebook agreed to pay $400 million in cash and 23.1 million shares of the
company's stock. At Tuesday's close of $64.89, the stock portion would be
worth $1.5 billion.

"Mobile is the platform of today, and now we're also getting ready for the
platforms of tomorrow," Facebook founder and Chief Executive Mark Zuckerberg
said in a prepared statement. "Oculus has the chance to create the most social
platform ever, and change the way we work, play and communicate."

Facebook's move to acquire Oculus comes roughly a month after the company
agreed to pay $19 billion in cash and stock to acquire smartphone-messaging
app WhatsApp Inc. The company in 2012 generated headlines when it agreed to
pay $1 billion in cash and stock to buy Instagram, a popular app used to help
people share photos.

The latest deal, however, isn't for an app but for a hardware maker. Oculus VR
is a startup that is trying to popularize virtual reality with its Oculus Rift
goggles. Oculus has said it intends to charge $350 for the new version of the
headset, which is due to ship to developers in July.

Earlier this month, The Wall Street Journal reported the company began
accepting orders for a new development kit. The new device marks an important
step toward the eventual launch of consumer products, Oculus said.

Oculus was launched after founder Palmer Luckey raised more than $2.4 million
in funding from a Kickstarter campaign to help fund development of the
company's first product.

Oculus, in a blog post, said Mr. Zuckerberg and other executives from Facebook
visited the startup's office "a few months ago" to discuss how the two
companies could work together.

The company said that while it "might not seem obvious" why Oculus agreed to
partner with Facebook, the companies "want to contribute to a more open,
connected world; and we both see virtual reality as the next step."

On Tuesday, Facebook said Oculus intends to maintain its headquarters in
Irvine, Calif., and will continue to develop the Oculus Rift. The transaction
is expected to close in the second quarter.

Facebook shares, in after-hours trading, recently slipped 54 cents to $64.35.

—Ian Sherr contributed to this report

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turndown
It's for 400M in cash w/ 1.6B in Facebook stock.

I feel like Facebook is really trying to get all the mileage it can out of its
stock.

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malanj
Yeah - it seems like Facebook thinks their stock is currently overvalued.
Compare that to Warren Buffet's strategy of preferring to never use Berkshire
stock in acquisitions but rather pay cash.

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loceng
Because he knows its a smart buy and cash is worth less than the stock after
acquisition. This is why Yahoo! bought Tumblr! for cash - or at least to
signal this.

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hadoukenio
This is pretty saddening news and happened before Oculus Rift went mainstream.
It really had the potential to take off but I now think that the main players
will jump ship once options vest.

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mdisraeli
This valuation feels extremely low for a leader in a growth sector, and that
is before we consider the fact that facebook's stock is probably overvalued,
and the team at Oculus are smart enough to know that.

Possible reasons for the valuation:

1\. Sony's announcement. It really wasn't a big surprise, but I can imagine
this spooked some people involved with Oculus

2\. Production delays or other unexpected development issues - but what could
they have been?

3\. Oculus has always seemed more of a PC product, so perhaps there are
factors in the PC market we are unaware of that they know better?

4\. Valve. I'm not sure how they factor into this, but there are a number of
possibilities. Oculus team not liking them? Valve working on a competitor?
Facebook trying to position themselves as a buyer?

What are your thoughts?

