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Last Call: A Picture is Worth a Thousand Words, Instagram Worth $1 Billion

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Sean Parker: You don't even know what the thing is yet. How big it can get, how far it can go. This is no time to take your chips down. A million dollars isn't cool, you know what's cool?
Eduardo Saverin: [Sarcastically] You?
Eduardo Saverin: [the scene shifts back to the deposition room] A billion dollars.
— The Social Network

The only thing cooler than a billion dollars? Being one of 13 Instagram employees, on a day the company is sold to Facebook for, yep, one billion dollars.

Market Musings (via Robert Hum)

  • The Dow Jones Industrial Average closed below 13,000 for the first time since March 12th, with Monday's 130 point drop. Prior to March 12, the Dow had not been over 13k since 2008
  • Dow, S&P have worst day since March 6
  • Dow back below 13,000, closes below 50-day moving average for first time since December 20
  • Dow, S&P down 4 straight days for worst 4-day drop in 4 months

Tracking The Selloff (Via Giovanny Moreano)

% Chg. % Chg. Pullback

Index Low to High Since Low Since High

S&P 500 32.3% 28.6% -3.7%

Dow 27.8% 24.3% -3.5%

Nasdaq Comp. 36.3% 32.5% -3.8%

Russell 2K 40.9% 33.5% -7.4%

S&P 400 MidCap 37.9% 32.8% -5.1%

Trading Volume Keeps Dropping:

NYSE volume was 3.14 billion shares today — the second lightest day of the year. Only March 12 has seen lighter volume this year.

Average daily volume at NYSE this year:

January 4.0 billion

February 3.9 billion

March 3.8 billion

April-to-date 3.6 billion

(Source: BATS)

What People Are Talking About Tonight

HEARD ON THE STREET: FACEBOOK'S INSTANT PRODUCT FIX/WSJ - Rolfe Winkler: "Mark Zuckerberg says he doesn't "plan on doing many more" big acquisitions. But don't hold him to that. As fast as Facebook is trying to innovate in the social-media world, it is being outpaced in crucial areas. Photo-sharing may be a key feature of Facebook, yet for mobile devices, it is Instagram that has captured the momentum. Instagram has more than 30 million users, generated mostly via the Apple App Store. The $1 billion price tag of Facebook's deal for Instagram looks hefty, especially considering Instagram has no revenue. Yet it is small relative to the $100 billion valuation Facebook hopes to secure via its initial public offering. Is Pinterest next?

FACEBOOK TIES TO INSTAGRAM ALREADY RAN DEEP/WSJ - David Benoit: "Maybe Instagram was a ”people you may know” suggestion for Facebook for some time. Today Facebook and Instagram announced that Facebook would buy the photo-sharing application for $1 billion in cash and Facebook’s soaring shares. And, as is the case in much of the recent tech boom, these two companies have been running in the same circles, even if they hadn’t come into direct contact until now. One of the earliest investors in Instagram was Andreessen-Horowitz, the venture capitalists run by Marc Andreessen, the co-founder of Netscape who has sat on Facebook’s board since 2008. Since its founding in 2009, Andreessen-Horowitz has become one of the most aggressive investors in the new generation of internet companies, and now stands to make a bundle on the Instagram.”

INSTAGRAM SIGNALS BREAK IN FACEBOOK’S DEAL-MAKING STYLE/NY TIMES - Michael J. De La Merced: “Facebook’s $1 billion takeover of Instagram is notable in many ways, including size. But it’s also the first time the social-networking titan didn’t strike a deal almost entirely for the programming talent of its target. The purchase of Instagram, the photo-sharing darling in which users can tweak their snapshots with a variety of filters, instead signals a major product acquisition by Facebook. It’s the biggest by far of the social network’s 23 announced acquisitions, according to data from Capital IQ.”

MEET THE 28-YEAR-OLD WHO MADE $400 MILLION TODAY/BUSINESS INSIDER- Nicholas Carlson: “Kevin Systrom is the cofounder and CEO of Instagram, which Facebook just acquired for $1 billion. Reports say Systrom will make $400 million in the deal. Instagram is a photo-sharing app that launched just a couple years ago, and already has 30 million users. We'd love to talk to Systrom about the deal, how he got to where he is today, and his plans going forward. But we can't. Facebook is going to IPO next month, and that means its executives — now including Systrom — are required to honor the SEC's "quiet period" rules. Fortunately, Systrom is not just a wildly successful CEO, he's also a Quora addict. He's answered over 50 questions on the site. Also, Systrom did a Q&A with Business Insider's Matt Rosoff last fall. Below, we've collected (and lightly edited) some of the best questions and on-record-answers from those resources to compile a Q&A with Silicon Valley's newest $400 million man.”

HEARD ON THE STREET: AOL: YOU'VE GOT MOOLAH/WSJ - Thorold Barker: “AOL is back in the technology big league-at least when it comes to cash piles. Once the Internet company completes its $1.1 billion patent sale and licensing agreement with Microsoft it will top even Apple in terms of percentage of market value accounted for by straight cash. In AOL's case, it will be $15 a share, or more than half of its current $26 stock price. Apple's roughly $100 billion hoard compares with a market capitalization approaching $600 billion. There any comparisons end. While Apple is adding to its cash by selling more devices, AOL is doing so by selling some family silver. Its operating business is still shrinking as AOL tries to offset the decline in its subscription access business with an aggressive content strategy to boost advertising growth.”

REVIEW IS EXTENDED FOR VIVUS' WEIGHT-LOSS DRUG QNEXA/WSJ - Drew Fitzgerald: "The U.S. Food and Drug Administration extended its review of Vivus Inc.'s weight-loss drug Qnexa by three months to give it more time to examine the company's latest submission. Following the news, Vivus shares sank 8.4% to $21 in after-hours trading Monday as the company said Qnexa's target date is now set at July 17. The delay comes after Vivus shares more than doubled in February on Qnexa's backing from a federal advisory panel, which cleared the way for U.S. approval of the first prescription diet drug in more than a decade."

SODASTREAM SEEKS COSMETICS PARTNER/FT - Louise Lucas: "SodaStream is exploring a tie-up with a cosmetics partner to take its soda siphons, which graced many a Mad Men-style cocktail party in the 1960s, into Japanese bathrooms. The move into skincare comes as Nasdaq-listed SodaStream, whose past owners have included Cadbury Schweppes, seeks to carve out a bigger share of the $260 billion at-home fizzy drink market now dominated by Coca-Cola and PepsiCo of the U.S.. SodaStream discovered a predilection among Japanese women to wash their faces in sparkling water while it was ramping up its overseas drive. “It’s a classic story of stumbling over a consumer insight unintentionally,” said Daniel Birnbaum, chief executive. “That could bring life to a different product line that could be sold through cosmetic chains.”

FEDS AIM TO SACK EX-BEARS QB JIM MCMAHON/CHICAGO SUN-TIMES - Tim Novak, Chris Fusco & Dan Mihalopoulos: “The federal government is looking to throw former Chicago Bears Super Bowl quarterback Jim McMahon for a loss. Long after his football career ended, McMahon quietly spent six years as a board member for Broadway Bank, owned by the family of Alexi Giannoulias, the former Illinois state treasurer who made an unsuccessful run for President Barack Obama’s old U.S. Senate seat two years ago. The Federal Deposit Insurance Corp. shut down the failed bank in April 2010. And now McMahon is among seven former Broadway Bank board members and two former bank executives who have been personally targeted in a lawsuit the FDIC filed to recover $104 million lost from 17 bad loans the bank made before regulators shut it down.”

SO WE SAILED INTO THE SUN, UNTIL WE FOUND THE SEA OF GREEN: Disclosed in a filing, Transocean CEO Steven Newman's 2011 total compensation was up 57% to $9.9 million… even though RIG's stock fell 45% last year. Looking further back... he even saw a compensation increase in 2010 from 2009 levels — even following the Deepwater horizon fiasco.

Newman’s Total Compensation

2009 $5.3 million

2010 $6.3 million

2011 $9.9 million

Tonight's Tweet

@dkberman: Remember this day. 551-day-old Instagram is worth $1 billion. 116-year-old New York Times Co. : $967 million.

Tomorrow’s Mover’s Tonight

S&P 500 (.SPX) – Keep an eye on 1,371, the index’s 50-day moving average. The S&P is just 11 points away from falling below its 50-day moving average for the first time since mid-December.

Vivus (VVUS) – Shares could be pressured by the FDA’s announcement to delay a decision on approving the biotech’s diet drug Qnexa. The FDA has now extended the deadline to July 17, giving it 3 additional months to review the drug.

Apple (AAPL) – A mere 6 weeks after its market cap crossed $500 billion, Apple could become just the 2nd company ever to hit $600 billion (Microsoft did so back in 1999). Apple shares needs to touch $643.53 to join the $600 billion club.

Alcoa (AA) – The aluminum producer will be in focus throughout the day ahead of its after-the-close Q1 earnings report that will mark the start of earning season.

Tomorrow's Economic Data

730 Mar NFIB

1000 Feb Wholesale Trade

1000 Feb JOLTS

1300 3-Yr Note Auction

Tomorrow's Earnings

BEFORE THE BELL:

Supervalu (10AM CC)

AFTER THE BELL:

Alcoa (approx. 4:05PM, 5PM. CC), Chevron INTERIM (approx. 5PM CC) (Interim report. Full results out on 4/27)

Tomorrow on CNBC

Masters Champion Bubba Watson on Power Lunch 1PM ET

CNBC Exclusive: Klaus Kleinfeld, Alcoa Chairman & CEO 4PM ET

CNBC Exclusive American Apparel CEO Dov Charney - throughout the day

Follow Tom Rotunno on Twitter: @tomrotunno

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