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Pre-Market: Facebook Buys WhatsApp in Push for Emerging Markets Share; Jobless Claims Tick Down


Google reportedly bid $10 billion for WhatsApp.

US stock futures pointed toward a slightly lower open on Thursday after hawkish comments from the Federal Reserve and poor overseas data.

Before the opening bell, Dow (INDEXDJX:.DJI) futures were down 0.11% to 15,998. S&P 500 (INDEXSP:.INX) futures declined by 0.14% to 1,823.00. Futures on the Nasdaq Composite (INDEXNASDAQ:.IXIC) fell 0.21% to 3,647.00.

Yesterday, the biggest news of the afternoon was Facebook Inc's (NASDAQ:FB) $16 billion acquisition of WhatsApp, a cross-platform mobile messaging start-up that claims about 450 million users. The acquisition priced WhatsApp far below the sticker price of $31.5 billion, but still valued it at just over half of Twitter Inc's (NYSE:TWTR) market cap. Previously, Google (NASDAQ:GOOG) reportedly offered $10 billion to purchase the company. If the deal goes sour, Facebook will pay a breakup fee of $2 billion. In addition to the $12 billion of stock and $4 billion in cash, WhatsApp's founders and employees could be eligible for another $3 billion if they stay at Facebook for four years.

So far, Facebook investors seem cool to the acquisition, as shares fell 1.5% pre-market.

WhatsApp is free for a year, but costs $0.99 per year after that for unlimited text messaging. Relatively little known in the US, the app is enormously popular in Europe, but also in India and other emerging markets. The company claims it has been attracting a million new users per day. For a more detailed look at its market penetration, see this handy map on TechCrunch.

BlackBerry (NASDAQ:BBRY), which has a similar service, rallied 5.4% in after-hours trading.

Tesla Motors (NASDAQ:TSLA) shares rose 11.4% in after-hours trading following a better-than-expected earnings report. The electric-car company's net loss narrowed to $16.2 million from $89.9 million a year ago. Adjusted for one-time items, it earned $46 million, or $0.33 per share, beating expectations of $0.21. Revenue rose to $615.2 million from $306.3 million. Management projects vehicle production to rise 55% in 2014.

Wal-Mart Stores, Inc. (NYSE:WMT) shares fell 1.7% this morning after the big-box chain reported earnings. Profit fell 21% to $4.4 billion, or $1.31 per share from $1.67 per share a year earlier. Analysts had expected EPS of $1.59. The store saw a drop in traffic due to the harsh winter weather in the quarter.

Yesterday, the Federal Reserve's meeting minutes soured the mood for many investors. In the meeting notes, it was clear that some Fed members were in favor of effectively raising short-term rates "relatively soon." The somewhat hawkish comments weighed on stocks, which closed lower.

Overnight, foreign economic data also weighed on investor sentiment. According to HSBC, Chinese manufacturing contracted to a seven-year low in February. The PMI index fell to 48.3 from 49.5. (Readings below the threshold of 50 indicate contraction in the sector.)

Markit's composite eurozone PMI showed that business conditions in the region are improving at a slower pace. The index fell to 52.7 from 53.2. Manufacturing growth slowed to 53 from 53.9 and services fell 0.2 points to 51.7.

The same indicator for the US will be released later this morning. Economists expect PMI to fall 0.2 points to 53.5.

Jobless claims in the US fell by 3,000 to 336,000 last week, as economists expected. The US consumer price index for January climbed 0.1% monthly, or 1.6% year-over-year, also largely in line with economists' expectations.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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