This week, Facebook’s CEO Mark Zuckerberg surprised Wall Street with his blockbuster $1 billion deal for Instagram, a fast-growing photo-sharing app for Apple’s (NASDAQ:AAPL) iOS and Google’s (NASDAQ:GOOG) Android. Now, there’s plenty of buzz about potential future targets.
True, Zuckerberg said in his blog that mega-dealmaking likely will be rare for his company. But CEOs often change their minds — and when it comes to the wild tech space, acquisitions often are a great way to remain competitive.
So should Zuckerberg have a change of heart, what juicy buyout candidates might he hunt down? Here’s a few possibilities:
Millennial Media (NYSE:MM) is the No. 2 mobile ad network in the U.S. The company came public a few weeks ago, nearly doubling on its first day of trading, and it is growing at a hefty rate. From 2010 to 2011, revenues surged from $47.8 million to $103.7 million, and it took a small net loss of $287,000.
Facebook is working hard to monetize its mobile traffic — and Millennial Media would be a big help. The company works across many of the top mobile operating systems and has deep relationships with brands like Coca-Cola (NYSE:KO), Disney (NYSE:DIS) and Zynga (NASDAQ:ZNGA). And other top Internet players, like Apple and Google, have already purchased mobile ad networks.
While users do lots of business on Facebook, the site mostly is about personal use and having fun. By purchasing LinkedIn (NYSE:LNKD), Facebook would have a dedicated social network for professionals.
LinkedIn has continued to grow at a sizzling rate; in the latest quarter, revenues surged by 105% to $167.7 million. A key driver is the company’s Hiring Solutions business. This leverages LinkedIn’s huge user base — which is at more than 150 million people — to provide recruiting opportunities for corporations. The segment grew by 136% in the quarter to $84.9 million.
According to Experian, Pinterest now is the No. 3 social network in the U.S. During the past six months, the user base has skyrocketed from 2 million to 19 million.
Pinterest basically is a digital scrapbook. A user can “pin” photos and place them into various categories, and another feature allows friends to re-pin and share the content on sites like Facebook and Twitter.
Facebook obviously wants to protect its social networking franchise; thus, buying Pinterest and taking out the No. 3 player would be a smart way to defuse a potential threat.
Facebook has made some moves in the local space but has not had much success. It’s a tough market to crack, but in light of its size, it is something Facebook cannot ignore.
To this end, Facebook could buy Yelp (NYSE:YELP). The local business search and review website gets about 66 million unique users per month, and more than 606,000 claimed business locations are on the site — up 97% over the past year!
Yelp also has been effective with its mobile strategy. The company attracts 5.7 million unique mobile users per month, and it has the top-listed free travel app in Apple’s App Store.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.