Facebook (FB) is rumored to acquire a drone manufacturer, Titan Aerospace for about $60.0 million. The acquisition will help Facebook to extend Internet access to the remote corners of the world, as a part of its Internet.org initiative.
Titan Aerospace was founded in 2012 and engages in designing, manufacturing and operating solar atmospheric satellites. The functionality of these solar-driven drones is very much similar to satellites and they can fly at near-orbit heights for five years at a stretch.
If deployed, these drones have the capability to remain above Federal Aviation Administration (FAA) regulated airspace in order to avoid legal issues.
Facebook can use these drones to keep equipments for Internet connections and would be flown above areas that do not have Internet access. They could blanket large areas with wireless Internet signals.
However, the signals would be slower and may not be able to handle as much data as land-based Internet connections. Nevertheless, it is sufficient to provide rudimentary Internet access to remote areas.
If this deal materializes, Facebook will be following the footsteps of Amazon (AMZN) and Google (GOOG), in extending its footprint into the dynamic world of robotics. Earlier in 2012, Amazon purchased Kiva Systems for $775 million to put robots in its distribution centers while Google bought Boston Robotics with an aim to refine its self-driven car technology.
Google also tried to expand Internet access with the help of the project called “Project Loon,” which deployed balloons in developing world to send Internet signals. Facebook’s attempt in this regard seems to be a much more feasible proposition than Amazon’s idea of drones that will deliver packages as well as Google’s plan of deploying balloons in the air.
However, Facebook recently spend a whopping $19.0 billion on Whatsapp, which raised a number of eyebrows as the service is not accretive. It will be interesting to note investor reactions, if Facebook finally decides to pursue this acquisition, which will again not contribute any immediate revenues to its top-line.
Currently, Facebook has a Zacks Rank #2 (Buy). Akamai Technologies (AKAM) with Zacks Rank #2 (Buy) seems to be an attractive investment option this season.
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