Facebook Buys Instagram For $1 Billion

VIA Forbes

Facebook is buying Instagram, according to this post today from Mark Zuckerberg. The purchase price of $1 billion will be paid in cash and Facebook shares. From the blog post:

This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.

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Instagram rocketed to 30 million iOS users in 18 months and was named iPhone app of the year in 2011. It is one of the best apps for taking and sharing photos from the iPhone. Its square images and assorted image filters let anyone make retro, techno and pretty pictures out of mundane shots of their kids, pets, food. Instagram’s Android version, released last week, got millions of downloads immediately. But $1 billion, if true, is still a crazy number. Instagram doesn’t make any money. Nor did it say it was focusing on revenue. It is still chasing big users. Kevin Systrom, Instagram’s CEO, wrote this to calm down his users in response to the deal. An excerpt:

It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.

It’s not clear what the Facebook deal means for the Series B funding round that may have closed last week, led by Sequoia Capital, Thrive, Benchmark and Greylock at a reported $500 million valuation. But the fact that Facebook would pay 2x what the company was supposedly worth within a week’s time suggests this is a defensive move. Facebook has the money (almost $4 billion in cash on hand as of December 2011), and certainly isn’t desperate for more users, most if not all of whom are already on Facebook (which greatly influences the price-per-new-active-user Facebook is paying. See crude math below.)

Fred Wilson has said that Facebook is really about photos and this only underscores that. The mobile-social photo sector is still amorphously led but if anyone is harmed by this deal it is Yahoo. Facebook is really going after its Flickr property here, to put the nail further in Yahoo’s coffin. (To its discredit, Yahoo hasn’t done anything with Flickr lately). Zuckerberg is playing chess, making a defining move in how it stands in the photo space. It’s like what Google did with YouTube.

One problem this will solve for Instagram’s 30-something million users is that sharing an Instagram photo on Facebook from your phone pretty much sucks right now. Here comes the much needed integration: bigger photos, more detailed info about the filters, etc. Right now all you get when you post an Instagram photo on Facebook from your phone is a small link and a thumbnail image. A better integration will stimulate more sharing through Instagram.

But a $1 billion for 30 million users that pay nothing for the service? Sounds crazy but consider this: Instagram is getting bought for $33 per user. Facebook is supposedly trading with a market cap of close to $100 billion and has 850 million users, giving it a value of $117 per user. So it looks like a decent bit of funny-money arbitrage, using well-endowed Facebook shares to acquire users and solidify hold of a strategic asset at a lower valuation. We don’t yet know how much of the deal is in cash vs. stock, so this calculation could be less favorable sounding but it still makes sense with Facebook currency.

Here’s a video Forbes editor Michael Noer did with Instagram CEO Kevin Systrom for our 30 Under 30 special. According to Wired’s Mike Isaac, Systrom netted $400 million from the sale.

~Signing Off~
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Lamar Odom & The Dallas Mavericks Part Ways

VIA ESPN

By Marc Stein
ESPN.com

Lamar Odom’s brief and bumpy ride with the Dallas Mavericks has come to an abrupt end.

The Mavericks and Odom spent Easter Sunday working out a parting, according to sources close to the situation, that frees the struggling Odom to leave the team immediately without actually being released.

Odom I’m sorry that things didn’t work out better for both of us, but I wish the Mavs’ organization, my teammates and Dallas fans nothing but continued success in the defense of their championship.
” — Lamar Odom

“The Mavericks and I have mutually agreed that it’s in the best interest of both parties for me to step away from the team,” Odom said in a statement to ESPN.com. “I’m sorry that things didn’t work out better for both of us, but I wish the Mavs’ organization, my teammates and Dallas fans nothing but continued success in the defense of their championship.”

Sources said Monday that Odom’s departure will be immediate and that the Mavericks intend to simply list him as inactive for the rest of the season instead of outright releasing him, leaving open the possibility that they could still trade him after the season in conjunction with the draft. Any team that has Odom on its roster as of June 29 must buy him out by that date for $2.4 million or otherwise accept responsibility for the full $8.2 million that Odom is scheduled to earn in 2012-13.

Even if either side had pushed for a formal release, there is little upside to taking that step now with Odom ineligible to play in the playoffs with another team because he wasn’t waived before the March 23 deadline. One source close to the 32-year-old told ESPN.com that the decision sets Odom up to “clear his head and start getting ready for next season” after his career-low numbers and minutes continued to dip as the season wore on.

Odom will not be at practice Monday, sources said, after he was given just four first-quarter minutes of playing time Saturday night in Memphis, accounting for the low point of a consistently rocky season in Dallas following his trade in December from the Los Angeles Lakers.

Odom’s representatives pushed for the trade to Dallas after it became known that the Lakers had agreed to trade Odom to the league-owned New Orleans Hornets as part of a Chris Paul blockbuster that was ultimately vetoed by NBA commissioner David Stern in his role as the Hornets’ lead decision-maker.

Throughout Odom’s season-long struggles to adapt to his new surroundings, Mavs officials and players have repeatedly expressed confidence that the former Laker could still be a playoff X-factor, pointing to the team’s 0-7 record without him as evidence that his presence — if only for the minute relief Odom gives star forward Dirk Nowitzki — has helped the team on some level.

But exasperation with Odom’s languid play reached an apparent breaking point in Memphis. Both coach Rick Carlisle and Nowitzki refused to discuss the Odom situation after Dallas’ 94-89 defeat to the Grizzlies.

“No Lamar questions tonight,” Carlisle told reporters.

Lamar Odom on ESPNDallas.com

The reality show that is Lamar Odom has ended in Dallas-Fort Worth.

Nowitzki, meanwhile, fielded questions for four minutes about his own struggles in the Memphis defeat — including two late turnovers — but ended the interview when asked about Odom.

“I’m done talking about that,” Nowitzki said.

Associates of the veteran forward, meanwhile, have long maintained privately that his lack of a clear-cut role with the Mavericks — where minutes behind Nowitzki are limited — complicated the transition. Lakers star Kobe Bryant said as much after a game in Dallas recently, describing himself as “pleasantly surprised” that the Odom deal wasn’t coming back to haunt his team.

“It’s tough,” Bryant said. “He comes to a team that’s pretty much set, you know what I mean? So it’s hard for him to find his niche. The fans, they don’t really understand what he does or how he can do it, you know what I mean?

“I hope they don’t unlock that mystery. I know. I know how to use him and to use his skill set and this, that and the other. But with this team, the roster that they had being pretty much set, it’s tough for him to be able to find his groove here.”

After declining to offer defensive anchor Tyson Chandler more than a one-year deal in the offseason to preserve future salary-cap flexibility, even after Chandler’s pivotal role in the Mavericks’ championship breakthrough last season, Dallas used the resulting trade exception created by Chandler’s sign-and-trade move to the New York Knicks to bring Odom in with the idea that the parties could help each other greatly on a one-season basis.

Dallas was initially seen as an ideal destination for Odom to start over after the jolt of being discarded by the Lakers, but he began the season well short of peak condition after a tumultuous summer on a personal level and never quite caught up.

Left reeling by the July murder of his 24-year-old cousin and a fatal car accident days later that killed a teen pedestrian after the car he was riding in as a passenger collided with a motorcycle, Odom did almost no basketball training during the five-month lockout. The contrast in preparation to his final season with the Lakers was stark; Odom won NBA Sixth Man Award honors in 2010-11 after spending the bulk of the summer of 2010 with Team USA, often playing as a center for a squad that won the FIBA World Championships in Turkey.

Odom leaves the Mavericks averaging just 6.6 points and 4.1 rebounds in 20.5 minutes per game while shooting 35.2 percent from the field and 25.2 percent on 3-pointers, all career lows by some distance.

Unlike a leave Odom was granted just before the All-Star break, there are no plans to bring him back to the team this time, sources said.

~Signing Off~
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