Forget about the financial news services. If you are Mark Zuckerberg you make the announcement first on Facebook. So, just a few minutes ago, I learnt when checking my daughter's status updates that Facebook were buying Instagram for $1b in cash and shares. This is the highest amount paid for a profitless internet company since Google paid $1.65b for Youtube in 2006. Indeed, Instagram has no revenues either and just 13 employees. And they wonder why we talk of 'bubbles'...
Almost everyone with an iPhone (or from last week Android phones too) and a Facebook account will be familiar with Instagram. Its software enables you to take a photo, apply effects and quickly share it on your Facebook account. It has grown from 1m users to 27m in just one year. Makes sense for Facebook - although the price seems pretty incredible and there are lots of other photo sharing services available to which disallusioned Instagram users can defect. Huge numbers use Facebook for photo sharing but I remember even Sheryl Sandberg (Facebook's COO) telling me that she thought their photo facilities were pretty basic. You can't even rotate an uploaded photo at the moment. Instagram will greatly enhance the Facebook photo experience.
This is the biggest ever Facebook acquisition and comes weeks before its NASDAQ IPO scheduled for May. Is Pinterest (See I've been pinned) next I wonder?
I understand that within the last few weeks FaceBook shares have changed hands for a new record valuing the company at $105b. I am sure that FaceBook will be a great success. I am less sure that at that price any new investors can make any money. Please reread my The $100b Facebook question for my reasoning that remains unchanged.