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An outrageous price for WhatsApp? Hang on ...

The $19 billion ($16 billion by some counts) that Facebook is paying in cash and stock to buy four-year old WhatsApp is staggering — and it reflects Facebook's urgency in penetrating the instant-messaging market. They couldn't buy Snapchat for $3 billion, so I guess WhatsApp is the best next thing.

Immediately after the deal was announced, WhatsApp founder Jan Koum said," WhatsApp will remain autonomous and operate independently ... you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product."

WhatsApp screens for Android
Source: Google Play
WhatsApp screens for Android

Yikes! Not a revenue producer it would seem. Instead, $19 billion in outflow seems to be in the cards.

(Read more: Facebook buys WhatsApp: A desperate move?)

The press is screaming that the price is outrageous for a new company that really doesn't have revenue to speak of. It would seem that this is an indication, according to the pundits, that Facebook has deep, desperate pockets and is willing to pay outrageous sums to position the company for further growth. And despite Facebook's plan, they overpaid — by a lot.

But what many analysts are missing is that the currency Facebook is using to pay for this deal is mostly company stock that, itself, is valued expensively relative to the current growth trajectory of the company. True, Facebook's ad-sales efforts are beginning to pay off, but this is a company that is slowing in terms of user adoption and time spent on the site. The valuation is rich. With a price-to-earnings ratio of 100, Facebook is no value stock to be sure. (By comparison, the SP&500 P/E ratio is around 15 ... 1/6 of Facebook!)

(Read more: What Facebook is really buying—time)

So, the bright folks at Facebook no doubt thought if you have a company with $170 billion market cap that's been priced up by the market based on incredibly lofty expectations for earnings in future years, why not spend some of the inflated stock on a similarly pricey asset? If you only have to pay $3 billion cash out of pocket and the rest is in stock, it's really just a check that you don't have to cash today and will only end up costing the long-term share price of Facebook.

So did Facebook pay a lot? In cash terms, $19 billion it would be a ridiculous purchase. In stock terms, it's not so expensive when you consider the limited amount of cash and the inflated asset completing the deal. I think this is a smart move and instantly makes Facebook a player in instant messaging. It helps solidify the company in social media and it's a reasonable bet. And, let's face it: Facebook itself is a bet on an unknown. This helps the odds.

(Read more: The big winners in the WhatsApp deal)

Does that mean I'm a buyer Facebook? No, I'm way too much of the fundamental investor to be able to rationalize current valuations. But that doesn't mean Facebook shouldn't be admired for using their inflated stock and capturing eyeballs. This is how the dot.com world works: You spend for assets with no revenue in the hope that eventually you'll be the last one standing.

—By Michael A. Yoshikami

Michael A. Yoshikami is the CEO and founder of Destination Wealth Management in Walnut Creek, California. He is also a CNBC contributor.

Disclosure: Michael Yoshikami does not currently own shares of Facebook.

(Vote: Is this a sign Facebook is desperate?)

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