5 ms·

A premium? Figures I saw were 10M units at $300. That's 0.666x projected sales, when 2-3x is the norm for mature companies.

devindotcom 12y ago
2-3x profit, right, not revenue? 10m units at $300 would not land anywhere near 3 billion in profits once you get to the bottom line. Lots of licensing fees coming up though.
- ryanatkn 12y ago
  No, revenue. For example Google's P/E (the equivalent profit ratio) is currently 31.4, and that's not including the control premium.
  - wise_young_man 12y ago
    Comparing the cost multiple for a private company's acquisition to a P/E ratio of a public stock is way different and not really a fair comparison.
    - ryanatkn 12y ago
      It's far from precise but I'd maintain it's useful to illustrate that if Oculus is a success, Facebook made a great buy.
    - mason55 12y ago
      Generally the starting point for any tech acquisition is 3x - 5x revenue multiplier. Occulus is hardware so their margins are lower than software, pushing them closer to the 3x mark.
adventured 12y ago
Not sure what you're referring to, re: 10 million units. They haven't sold anywhere near that. Currently their price to sales ratio is closer to 150. Facebook paid a massive premium no matter how you cut it. Even if they grow sales ten fold over the next three years, they'll still have paid a premium. I don't think the Oculus purchase can be justified in any near-term financial regard, it's a very long term bet. "Oculus has said it will start selling a consumer product in 2014, and till now has shipped an impressive 60,000 units to developers at $350 each" http://www.forbes.com/sites/parmyolson/2014/03/25/facebooks-plays-the-long-game-with-2-billion-bet-on-oculus-rift/ http://www.forbes.com/sites/parmyolson/2014/03/25/facebooks-...
- ryanatkn 12y ago
  I qualified it as 0.666x projected sales (intentionally not rounded >:), so yeah that 10M was a projected figure, which unfortunately I can't find the source for. By the end of 2015 I think Oculus will look like a steal, unless the goodwill is shot.

devindotcom 12y ago

2-3x profit, right, not revenue? 10m units at $300 would not land anywhere near 3 billion in profits once you get to the bottom line. Lots of licensing fees coming up though.

ryanatkn 12y ago
No, revenue. For example Google's P/E (the equivalent profit ratio) is currently 31.4, and that's not including the control premium.
- wise_young_man 12y ago
  Comparing the cost multiple for a private company's acquisition to a P/E ratio of a public stock is way different and not really a fair comparison.
  - ryanatkn 12y ago
    It's far from precise but I'd maintain it's useful to illustrate that if Oculus is a success, Facebook made a great buy.
  - mason55 12y ago
    Generally the starting point for any tech acquisition is 3x - 5x revenue multiplier. Occulus is hardware so their margins are lower than software, pushing them closer to the 3x mark.

adventured 12y ago

Not sure what you're referring to, re: 10 million units. They haven't sold anywhere near that. Currently their price to sales ratio is closer to 150. Facebook paid a massive premium no matter how you cut it. Even if they grow sales ten fold over the next three years, they'll still have paid a premium. I don't think the Oculus purchase can be justified in any near-term financial regard, it's a very long term bet. "Oculus has said it will start selling a consumer product in 2014, and till now has shipped an impressive 60,000 units to developers at $350 each" http://www.forbes.com/sites/parmyolson/2014/03/25/facebooks-plays-the-long-game-with-2-billion-bet-on-oculus-rift/ http://www.forbes.com/sites/parmyolson/2014/03/25/facebooks-...

ryanatkn 12y ago
I qualified it as 0.666x projected sales (intentionally not rounded >:), so yeah that 10M was a projected figure, which unfortunately I can't find the source for. By the end of 2015 I think Oculus will look like a steal, unless the goodwill is shot.