If Facebook were smart it would take advantage of its high valuation and buy into quality, profitable businesses that are currently undervalued.

It’s one of the smartest ways a company can instantly profit.

Think back to the dotcom days when companies with no sales were valued in the billions…

If they were smart they could’ve taken their sky-high valuations and bought profitable, traditional companies, (even mining companies that were valued very low back then) acquiring them cheaply.

Then they would have secured quality assets and profits for a low price and when the dotcom bubble burst they’d have quality assets left.

Am I saying Facebook is another dotcom bubble?

Not quite.

But its $104 billion valuation at IPO is certainly heading there.

The market wasn’t fooled though. It realised it was over-valued and it has since dropped to $28 a share.

That’s the amount it was going to be priced at originally, before Morgan Stanley and Co. got greedy and listed it at $38 a share, leaving nothing on the table for new or early investors, selling out more than initially planned.

Which simply highlighted they knew $38 was the best price they’d see for a while.

Personally, I believe Facebook is worth about $19 a share.

That’s still a $50 billion valuation and almost 50 times its profit.

To think… Mark Zuckerberg had agreed to sell to Yahoo for $1 billion, until Yahoo’s share price dropped making the deal $800 million, and he walked away…

If Yahoo hadn’t been greedy and offered more, they could’ve acquired Facebook for a little over $1 billion. The same price Facebook recently paid for Instagram, a photo-sharing app that’s yet to make a profit and has only 12 staff.

One reason to go public is to make acquisitions easier.

However Facebook was already trading on the secondary markets at $44 a share, a valuation in excess of $110 billion.

So it didn’t really need to list to make acquisitions because it already had a high valuation, a liquid secondary market, and less scrutiny.

Regardless, acquisitions are key for Facebook moving forward.

However it can’t afford to just pay sky-high for non-profitable start-ups like Instagram.

It needs to buy some undervalued companies with large revenues.

Personally, if I were Facebook I’d be looking to snap up companies like RIM, maker of Blackberry, if they could get it at a steal.

Many have written RIM off but I believe it’s too early to sound its death knell.

After all, it still turns over $18 billion in sales.

Even though they’re losing market share and sales are dropping they still have a huge client base. And when Blackberry 10 finally arrives, (expected in the second half of this year) sales should grow again.

It doesn’t ever need to grow market share, just remain a solid niche player to the corporate market, which an improved phone can deliver.

The point is: Facebook’s revenues would jump immediately with an acquisition like this.

RIM could also be made very profitable with cost cutting.

It has thousands of patents, which are very valuable… and also the main reason Google just paid $12 billion for Motorola.

Facebook needs to monetize mobile ads. And needs a mobile platform to do so.

There are massive synergies and Facebook needs an addition like this to its business, to compete with Apple and Google.

Facebook plans to build its own smart phone (as reported recently by hiring ex-Apple engineers). And that’s risky because it can take a long time and a lot of capital. Plus people won’t buy a smart phone just because it’s branded Facebook.

Whereas if they were to own RIM they’d pick up a large legion of raving Blackberry fans, and a division that (despite its tanking sales) would add $18 billion in revenue to Facebook’s revenues of less than $5 billion expected this year.

With cost cutting and synergies Facebook’s profits could quadruple quickly and its high valuation could soon be justified.

The key is picking RIM up for a bargain, which with its shares down 75% is more than achievable.

Especially because Facebook is likely to report falling revenues and profits soon, which will put downward pressure on its share price.

Critics will say an acquisition attempt of RIM would punish investors, however I’d suggest those invested in Facebook are already being punished, and it will get worse when lower revenues are reported.

Buying quality assets with obvious synergies, below value, combined with acquiring them with stock that has a sky-high valuation means not only gaining an asset cheaply, but doing it with paper money that’s currently way over valued.

I’ve invited Mark Zuckerberg’s sister and former leading Facebook Executive Randi Zuckerberg to speak at this year’s 21st Century’s Financial Education Summit (September 15th – 17th at the Brisbane Convention Centre) to share the remarkable story of Facebook, from start-up to $100 billion company.

Randi has been listed in the top 50 digital female influences of our time, not just for her Facebook role but for her numerous other ventures too.

Seats are available from just $197.

For more information visit www.financialeducationsummit.com.au

I’ll also be hosting private dinners in Brisbane with Randi Zuckerberg, Mark Bouris and Danny Green for 20 select individuals.

If you’d like to attend email enquiries@21stca.com.au or phone 1800 999 270

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The 21st Century Group is also looking at Internet start-ups to invest in, as well as provide free mentoring, and office space to work from at its Head Quarters in Melbourne.

Please submit your proposals to enquiries@21stca.com.au

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Along with key speakers I’ll be delivering a 4-day business education program in Melbourne, November 16th – 19th, and in Brisbane next February.

For more information visit www.21stcenturybusinessacademy.com.au

For 21st Century Members, their spouse, and teenager, attendance at this $5000 program is made available for no charge.

For more information on becoming a 21st Century Member visit www.21stcenturyeducation.com.au/programs/homestudy

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I’m giving away free excerpts of my book, “101 Lessons I Learnt From Richard Branson”.

Visit www.21stcenturybusinessacademy.com.au to download your excerpt now.

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. http://www.jamiemcintyre.com

Author Bio: Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Category: Education
Keywords: 21st century, blackberry, Blog, dotcom, facebook, IPO, jame mcintyre, RIM, zuckerberg