
WhatsApp Lost $138M Last Year - aaronbrethorst
http://dealbook.nytimes.com/2014/10/28/facebooks-21-8-billion-acquisition-lost-138-million-last-year
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melvinmt
I think FB cares more about ruling the world than WhatsApp's P&L statement.
From "Mobile is Eating The World" [1]:

Global SMS: 7.5tr messages a year

WhatsApp: 7.2tr messages a year (with just 30 engineers)

[1]
[https://news.ycombinator.com/item?id=8524256](https://news.ycombinator.com/item?id=8524256)

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wavefunction
Of course we should note that WhatsApp (and Facebook!) is piggy-backing on the
work of the many thousands of telecom engineers who have over the years built
and maintained the infrastructure that both Facebook and WhatsApp require to
survive.

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ddrmaxgt37
And we are all piggy-backing on whoever invented the wheel.

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jasonwilk
$206.5 million of that loss was for share-based compensation expenses and
issuance of common stock below fair value -TC

This is a poor headline.

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sah88
Sorry I see the 98.5 for the year end 2013 but I don't see how your getting to
206.5 from there? Their total costs are only 148m on the statement of
operations. Also presumably some of that stock based compensation is in lieu
of paying cash. I'm not sure its fair to discount it entirely.

edit: I sleuthed out what TC means. Tech Crunch are referencing first half of
2014 this article is year end 2013.

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drham
"Research and development at the start-up, which employed just 55 people at
the time it was sold, totaled $77 million"

I'm super-confused by this, can anyone explain what sorts of expenses would be
this high and labeled as R&D costs for a company like WhatsApp?

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sah88
Probably taxes. There are non-trivial tax credits for R&D spending. My guess
is they shoehorned as much of their costs into R&D as they could. You can see
they got 1.2 million in R&D credits in 2013 in the referenced document.

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necubi
Right. It's SOP for tech companies to list basically all of engineering as R&D
for tax purposes.

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downandout
I think the Whatsapp price was a huge blunder by Zuck. Whatsapp has lots of
users - most of whom are in countries viewed as almost worthless by
advertisers. Their US footprint is insignificant, and shows no signs of
growing here or in many other valuable countries. Their current revenue -
$10.2M/year with 400M users - shows their users' propensity to pay.

Even if you valued Whatsapp by Facebook's P/E ratio of 87.74, it would have to
make ~$215M/year in net profit to justify the (original) $19 billion price
tag. That's around $0.50/user/year in net profits. I just don't see it ever
happening.

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yummyfajitas
Whatsapp has completely won in many foreign markets.

I don't have a Facebook, but network effects forced me to use whatsapp.
Literally every woman I've attempted to communicate with over the past year
uses whatsapp exclusively. They may be from Africa, central Europe, India,
Vietnam, its all the same - whatsapp.

Personally I hate it - it's terrible compared to google hangouts and doesn't
even have a web client. But if I don't use it, no women.

Maybe you want to write off the rest of the world, but zuck isn't.

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oh_sigh
Out of curiosity, why are you communicating with women from Africa, central
Europe, India, and Vietnam?

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yummyfajitas
Wikipedia has a good explanation:
[http://en.wikipedia.org/wiki/Dating](http://en.wikipedia.org/wiki/Dating)

More seriously, I'm a foreigner and I live in a college town so I get many
opportunities to meet foreigners. Indians also tend to view me more as a
source of novelty sex rather than as a real relationship [1]. US/Africa
culture gaps are also a LOT smaller than US/India or Africa/India culture gaps
which sometimes makes things easier.

[1] I'm not moralizing or criticizing nor am I particularly averse. One night
stands are great. I'm merely at a place where companionship is as important to
me as sex.

[edit: I should clarify that I'm an American, I currently live in India, and
"foreigner" = "not Indian".]

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segmondy
A lot of people are missing the point, citing the income WhatsApp has to make
for Facebook to make back the money.

What they forget is that WhatsApp was able to serve almost half a billion
users with "minimal" hardware. That's what Facebook wants, Facebook will save
a lot of money if they can be as efficient as WhatsApp in terms of hardware
savings, engineer ratio user ratio. I would imagine that's Mark is aiming for.

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aaronbrethorst
Facebook was removing a potential competitor from the market, just like they
did with Instagram.

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joelrunyon
So that's less than 1% of their worth ($19B sale). Does that seem like such a
huge number now?

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davis_m
"worth"

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jordanthoms
I think in 5 years 19B will look cheap to own messaging in a substantial
portion of the world.

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himeag
Did anyone else stop using WhatsApp after acquisition due to Facebook's
privacy policies?

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thrownaway2424
Did they actually change the terms?

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yuhong
And would they in this day and age?

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mariusz79
It's hard to believe that app that is free for a year and than 99 cents per
year could be losing money. /sarc

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kenrikm
Given that it's unlikely users will jump ship if they are happy with it over
$1/year and the fact that they have 400 million users I think there's a pretty
good chance that revenue number will come up.

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thaumasiotes
...but there are so many options to send text messages for free. Why pay the
$1 / year?

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feld
Privacy and no ads. The "free" alternatives are not "free".

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forgotpasswd3x
Telegram is "free". I'm not sure why "free" needs to be in quotes. I don't
know how I feel about Privacy being touted as a benefit of using anything
owned by Facebook.

