Today: Facebook commits $2 billion to purchase of virtual reality pioneer Oculus in another big bet on the future.
The Lead: Facebook pays big money for another acquisition, Oculus
Facebook shocked Silicon Valley with another acquisition Tuesday, agreeing to purchase virtual reality company Oculus VR for $2 billion just a month after committing $16 billion -- and likely more -- to obtain WhatsApp.
The Menlo Park social network announced Tuesday afternoon that it had promised $400 million in cash and 23.1 million shares of Facebook, valued at $1.6 billion based on recent trading averages, to secure the private company known for its Oculus Rift virtual reality headset.
While the Oculus Rift has been demonstrated mostly as a platform for gaming, Facebook is interested in more, with founder and CEO Mark Zuckerberg hinting in a post on the company's platform that the technology could turn into Facebook's version of Google Glass, the Mountain View company's wearable computer.
"Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home," Zuckerberg wrote Tuesday.
"One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people," he later added.
Oculus will continue to develop the Rift helmet as a gaming device independent of Facebook, Zuckerberg said, but the Irvine company will then begin to focus on new frontiers for virtual reality. Uses Facebook mentioned in Tuesday's announcement included communications, media and education.
"We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways," Oculus co-founder and CEO Brendan Iribe said in Tuesday's news release. "It is a transformative and disruptive technology, that enables the world to experience the impossible, and it's only just the beginning."
Tuesday's acquisition is another audacious and expensive bet on future technology by Facebook, which announced on Feb. 19 that it would acquire Mountain View mobile-messaging application WhatsApp for $16 billion, which was also broken down into cash and stock. Like that deal -- which included $3 billion more in possible stock rewards for employees moving from WhatsApp to Facebook -- Oculus's agreement includes possible future benefits, which could reach an additional $300 million.
WhatsApp brought with it a large, global user base, while Oculus has yet to commercially release an actual product, shipping a version of the headset for developers last year and currently offering a new developers kit for pre-order. Still, the company has stoked excitement in the gaming and tech communities with its demonstrations at various conferences and other gatherings, winning a 2013 Crunchie award for best hardware startup. The company announced in June 2013 that it had raised $16 million in a venture-capital round led by Spark Capital and Palo Alto-based Matrix Partners.
Facebook stock gained 1.2 percent to $64.89 in regular trading Tuesday, appreciably less than the $69.35 price Facebook used in calculating the total value of the stock transferred in the Oculus acquisition. Shares declined about 1 percent in after-hours trading following Tuesday's announcement.
SV150 market report: Wall Street gains as eBay sets up Icahn rumble
Silicon Valley technology stocks bounced back from a rough Monday to post strong gains Tuesday, though eBay declined after announcing the date for its big showdown with activist investor Carl Icahn.
eBay dropped 0.4 percent to $56.33 after issuing a letter to shareholders that announced its annual shareholders meeting will take place on May 13. The meeting has large implications thanks to Icahn's campaign to convince the e-commerce giant to spin off its PayPal payments company, which morphed into a call for an initial public offering that would sell 20 percent of the company to the public. eBay continued to stress that shareholders should vote for its slate of directors, instead of Icahn's nominees, and reject the investor's PayPal proposal. "Mr. Icahn's proposal is not a new idea, and Mr. Icahn himself recently backed away from supporting his own proposal," the letter noted.
Google increased 0.1 percent to $1,158.72 as the search giant revealed reduced pricing for its cloud services one day after Cisco announced its own $1 billion plan to offer similar services; Cisco jumped 3.6 percent to $22.34 Tuesday. Apple gained 1.1 percent to $544.99 after the Cupertino company confirmed an improved search function on its App Store. Nvidia held steady at $18.45 while announcing new initiatives at its analyst day and temporarily dropping the price of its handheld gaming system. Intel gained 1.4 percent to $25.46 before announcing the acquisition of San Francisco wearables company Basis Science after the bell, and Hewlett-Packard jumped 2.9 percent to $32.56 after pushing back its announcement about 3D printing.
Up: Cisco, Zynga, HP, Juniper, NetApp, Intel, Applied Materials, Gilead, Facebook, VMware, SolarCity, Apple, Electronic Arts, Adobe, Sandisk
Down: Yelp, SunPower, Netflix, Yahoo, LinkedIn, Twitter, Workday, Palo Alto Networks, Pandora, Intuit, eBay, Symantec
The SV150 index of Silicon Valley's largest tech companies: Up 10.77, or 0.7 percent, to 1,539.71
The tech-heavy Nasdaq composite index: Up 7.88, or 0.2 percent, to 4,234.27
The blue chip Dow Jones industrial average: Up 91.19, or 0.56 percent, to 16,367.88
And the widely watched Standard & Poor's 500 index: Up 8.18, or 0.44 percent, to 1,865.62
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.