Late last week, British tech blog Pocket-lint said Facebook Inc. (FB: Quote) is looking to buy Opera Software ASA in a bid to launch its own browser.
Shares of the Norwegian software firm surged Tuesday in Oslo, as analysts reportedly estimate that the social networking giant might have to shell out over $1 billion to buy the company behind the Opera family of web browsers.
The move would place Facebook in direct competition with technology giants Google Inc. (GOOG: Quote) and also Yahoo Inc. (YHOO: Quote), which recently launched the Axis browser.
The deal would be a strategic fit for Facebook, as building its own browser would consume time. Further, the acquisition might enable Facebook to build its own smartphone or enhance its services that are currently available on mobile phones. The company is yet to figure out a model to effectively monetize from growing users of its services through mobile phones.
The Opera browser is available on desktop computers, phones and tablets as well as the Nintendo Wii, and the company claims to have more than 200 million users.
Opera has sought to expand its revenue model into areas like mobile advertising, though the Opera Mobile and Opera Mini continue to remain the main sources of revenue for its business. The company is reportedly in talks with potential buyers.
Sitting on a big pile of cash currently, Facebook seems to be in a spending spree. It recently acquired Instagram, a mobile image sharing system, for about $1 billion in cash and stock. The company also announced that it will launch an App center as part of its plan to increase its presence in the mobile marketing.
Media reports indicate that Facebook is also looking at acquiring face recognition technology company Face.com.
Facebook's recent initial public offering created hype in the market. The successful, but bumpy IPO raised $16 billion, the largest ever for an internet company. Despite the IPO ballyhoo, Facebook shares have been on a downward spiral from the day of its debut.
Facebook's IPO came at a time when questions have been raised about its revenue growth model. The weakness in its revenue model has prompted Facebook to scout for new sources of income, and diversification seems to be the only way out.
There is also a fear that Facebook would become stagnant as a mobile application for the mobile platforms if it is not finding new avenues.
The New York Times had reported that Facebook may launch its own smartphone by next year. For the past two years, there have been rumors that Facebook, basically a software company, was trying to find a space in hardware business.
According to the NYT report, about half a dozen of ex-Apple engineers are working on Facebook's smartphone secret project and many among this team have hands-on experience on master projects of iPhone and iPad.
FB closed Friday's trading at $31.91 on 37.15 million shares. In Tuesday's pre-market, the stock is down $0.42 or 1.32 percent to $31.49.
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by RTT Staff Writer
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