Facebook buys Instagram
Facebook, the biggest social- networking service, is buying the Instagram mobile photo-sharing application for about $1 billion in cash and stock, using its biggest acquisition yet to attract users of mobile devices.
The transaction is expected to close later this quarter, Menlo Park, Calif.-based Facebook said today in a statement on its site. Facebook Chief Executive Officer Mark Zuckerberg also announced the deal on his Facebook profile page.
Instagram, owned by San Francisco-based Burbn, boasts more than 30 million users and the most popular free photo- sharing application on Apple's App Store. The deal may help Facebook win handset users and advertisers who target them, said Rebecca Lieb, an analyst at Altimeter Group LLC.
It marks the first time Facebook has acquired a product and company with so many users, Zuckerberg said in his posting. Facebook, which intends to raise $5 billion in the biggest initial public offering of an Internet company, says it plans to let Instagram remain independent.
—Bloomberg News
Yellow Pages fingers take a walk
AT&T agreed to sell a majority stake in its Yellow Pages directory division to Cerberus Capital Management LP for about $950 million as part of an effort to dispose of units that are holding back revenue growth.
AT&T will receive $750 million in cash and a $200 million note, according to a statement from the Dallas-based phone carrier today. AT&T will keep a 47 percent stake in the business, which had about $3.3 billion in revenue in 2011.
The sale lets AT&T, which hung on to its Yellow Pages division as competitors fled the business, to reduce its exposure to a unit facing increasing competition from online rivals Google Inc., Groupon Inc. and Yelp Inc. To boost sales, AT&T, the biggest U.S. phone company, is focusing on its mobile- phone business, where it trails Verizon Wireless.
"It is a sensible step," Craig Moffett, a Sanford C. Bernstein & Co. analyst in New York who rates AT&T shares market perform, wrote in a report. "Unfortunately for AT&T, however, the transaction is barely material, either in the proceeds it returns or in the change it portends to AT&T's overall growth rate."
—Bloomberg News
AOL sells patents to raise cash
AOL, under shareholder pressure to make changes as revenue shrinks, agreed to sell and license patents to Microsoft in a transaction valued at $1.06 billion, triggering its biggest stock gain in two years.
AOL rose 43 percent to $26.40 at the close in New York, the biggest one-day increase since Nov. 25, 2009. The shares had lost 8.2 percent of their value in the past year before yesterday. Microsoft, meanwhile, fell 1.3 percent to $31.10 yesterday.
The arrangement, which will give more than 800 patents and related applications to Microsoft, lets New York-based AOL generate additional funds amid slow advertising growth and a decline in dial-up Internet subscribers. AOL, whose revenue has dropped 29 percent since it was spun off from Time Warner in late 2009, has faced pressure from shareholder Starboard Value LP to consider moves such as a patent deal.
"Few people were anticipating that they were going to generate $1 billion-plus of cash," said Tom Forte, an analyst at Telsey Advisory Group in New York. "The company has done an incredible job of creating value from their patent portfolio."
Microsoft, the world's biggest software maker, is adding the patents as it tussles with Motorola Mobility Holdings in the courts to protect intellectual property rights related to the Windows Phone operating system and Xbox video-gaming consoles. Technology giants such as Apple Inc. and Google also are building patent war chests in an effort to fend off litigation and defend their products.
—Bloomberg News
Banker pleads to stock fraud scam
A former bank director who pleaded guilty to grand larceny in a $60 million stock fraud scam has been sentenced in New York.
A Manhattan judge says John Mazzuto will serve between 1½ years and 4½ years in prison.
Mazzuto was accused of illegally giving stocks to friends and relatives, lying to investors and pumping up stock prices as CEO of Industrial Enterprises of America.
He pleaded guilty last year to grand larceny and scheming to defraud.
Two drunken driving cases stemming from an arrest in Florida are still open. The company filed for bankruptcy in 2009. It remains in business.
—The Associated Press
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