No, Facebook should not buy Nokia

Some believe that Facebook should buy Nokia and/or Yahoo. I look at the pros and cons and ultimately conclude whether one successful company should buy two declining companies.

Forbes yesterday published an article arguing that Facebook should buy Nokia. I strongly disagree. I don't think the American social networking giant should buy the Finnish cell phone giant because the move simply doesn't make sense. Facebook needs to up its strategy in mobile, but buying a (currently) declining mobile company is not the way to do it.

Here are the six points from the article outlining why Facebook should acquire Nokia:

  • Facebook needs revenues and EBITDA.
  • Apple (AAPL) and Google (GOOG) have committed to a combined hardware/software solution for mobile phones.
  • Alex Cocotas of BI Intelligence predicts that 1.5 billion smart phones will be sold in 2016.
  • Facebook's making nothing from mobile now and it's not clear they ever will.
  • Nokia is already in bed with Microsoft (MSFT), which is a close Facebook partner (and investor).
  • Zuckerberg clearly has global ambitions and taking over Nokia plays into that narcissistic fantasy.

These points can be summarized by saying something like "Facebook should buy Nokia so that it can make money in mobile to compete with Apple and Google." It doesn't explain why Nokia is the way to do it. Frankly, I think it's even more ridiculous than buying webOS from HP, which is saying something.

Facebook has a mobile strategy; it just hasn't been tested yet. Earlier this week, the company announced a huge mobile push. First, it announced mobile payments (it is working with operators around the world to minimize the number of steps needed to complete a transaction in mobile web apps). Next it released a mobile browser test suite (to help push mobile Web apps by helping developers understand which mobile browsers support the functionality their app needs). Lastly, yesterday it unveiled mobile ads (to start monetizing its 425 million monthly mobile users).

That's right; all of this happened at the end of February 2012. I'm pretty sure the social networking giant has mobile revenue plans that don't include Nokia. It's been working on them for a long time and is only now starting to push them out. This is just the beginning.

By the way, the article also talks about why Facebook should buy Yahoo. Earlier this week, Yahoo became a patent troll when it threatened Facebook with a patent war. Facebook is currently weighing its options, but something tells me that buying Yahoo outright would be a last resort.

Having Yahoo's patents certainly would help, and there are still many key employees at the failing Internet giant, but Yahoo is still too expensive at this point. If Facebook really were to buy Yahoo, I would argue it should happen when Yahoo hits rock bottom, which I believe hasn't happened yet.

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