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Is Facebook ready to spend $1b for Opera?

(Agencies) / 30 May 2012

Opera Software would cost Facebook over $1 billion as competition from Google and others could push up the price tag, analysts said on Tuesday, as takeover talk pushed the shares up as much as 26 per cent on Tuesday.

Oslo-listed Opera, coveted for its advanced mobile phone software technology, would be a perfect fit for Facebook but the firm’s business is also vital for some of the industry’s biggest players so any bid is likely to attract others to the table. “Opera would be sensible for Facebook on several levels,” Arctic Securities said.

“It would enhance the now limited mobile experience of Facebook, improve Facebook’s mobile monetisation problem, help Facebook retain online game developers leaving the social network over the lack of a mobile platform and further improve Facebook’s ability to target ads.”

Opera makes various web browsers that work across an array of platforms including mobile phones, tablets, PCs, and TVs.

The software is available on most phones, including the iPhone and the BlackBerry, and works on various operating systems, including Android, giving Opera the reach Facebook is seeking.

The browser can compress data by as much as 90 per cent, saving consumers on data charges, and has the technology to better display ads, a key factor for Facebook which has struggled to convert its rapidly increasing traffic from mobile platforms to revenue.

Opera, which has about 200 million Mobile and Mini subscribers, has also built a significant market share in key emerging markets, such as India, Brazil and Asia, where Facebook has been generally weak. It would be such a perfect fit for Facebook, analysts said it would have to pay a hefty premium.

Shares hit new low

Meanwhile, Facebook shares fell to a new low, extending losses from the worst-performing large initial public offering during the past decade to more than 20 per cent.

The stock fell as much as 5.9 per cent to $30.03 on Tuesday, slipping below the prior low of $30.94 on May 22. Facebook debuted on May 18 after underwriters sold shares at $38. They lost 5.6 per cent to $30.14 in mid-morning New York trading.

Facebook options trading began on Tuesday, with volume for puts exceeding calls by 1.29-to-1, data compiled by Bloomberg show. More than 62,000 puts giving the right to sell traded. June $30 puts were the most-active contracts, with volume at 10,974. They were followed by June $34 calls and June $32 calls.


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