IT-A different plane of business

The buy out of Whatsapp by Facebook at an astronomical sum underscores the phenomenal rise of  'innovative ' IT .FB itself , a pioneer of this business, is just 10 years old and now valued at $134 blln.It has a client base of 1.25 bln of which around 1 bln are mobile users. Whatsapp  with 450 mln mobile users and growing, may have some commercial leverage for FB  of which we are not yet aware. FB too is  perhaps less than  clear on a road map today as to how to carry this acquisition forward or the level  to which  Whatsapp may take it before another App intercedes to change the  script. . The esoteric world of IT operates in an abstract plane where evaluations have no collateral back up like fixed assets in  manufacturing or securities in financial services. FB  had a stutter in its IPO of 2012, opening  to  sharp drop in share value  to recover later, Both of which defies explanation by conventional accounting. Given this the 19 bln buy out   could appear highly notional  as the transaction is largely on stocks and much less cash, though IT companies have always been cash rich.In effect the IT sector has created a make believe world of its own for valuing a buy or a sale as their business is essentially driven with a crystal ball. This would be fine except that its currency of trade happens to be the same as regular brick and mortar businesses.Should a major bubble burst in this translucent  region of IT, which is highly probable, the conventional sectors stand bear a far disproportionate damage.

Pub Business Standard Feb 25
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20140225aT014101004&ileft=236&itop=1313&zoomRatio=181&AN=20140225aT014101004

Pub Deccan Herald Feb 25

Pub Tribune Mar 1
http://www.tribuneindia.com/2014/20140301/letters.htm
Pub Financial Express Mar 3
http://www.financialexpress.com/news/letters-to-the-editor-what-s-up-with-it-/1230588

Pub Telegraph Mar 6
http://www.telegraphindia.com/1140306/jsp/opinion/story_18034572.jsp#.UxfThj-SyNA