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By Jason Stipp and Jeremy Glaser | 04-13-2012 02:00 PM

Getting the Picture

Morningstar markets editor Jeremy Glaser reports on the latest developments for Facebook, the labor market, digital media, and Best Buy.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five. Lots of pictures were emerging across the market and economy this week, so what were some of those developments?

Here with me to offer some insight is Morningstar markets editor, Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Always a pleasure, Jason.

Stipp: So, what do you have for The Friday Five this week?

Glaser: This week, we're going to talk about Facebook, Alcoa, e-book pricing, jobs momentum, and finally Best Buy.

Stipp: Facebook making a big splash this week with a big purchase. What's the story behind that?

Glaser: Facebook is spending $1 billion to buy Instagram, which is a photo sharing app that allows iPhone users, and now Android users, to take photos, apply different filters to it, and then share it with their friends either through the app or through Facebook or through Twitter, or any other social network that they want.

I think that this is an interesting deal for a couple of reasons. First, it really is Facebook's first foray into a big acquisition. It's by far their largest deal. In the past, they've acquired little companies here and there, but really they've just been buying the talent, they haven't been buying the products.

So, this is their first attempt at really trying to integrate someone else's network into their own, and I think they're doing this because they see that photos are a really important part of what people do on Facebook, and a lot that has been happening through Instagram. They want to make sure they continue to control that value.

I think that they also want to prove that they can do these acquisitions. They're going to have a lot of cash after this IPO. They don't have a lot of needs for that cash, as we saw through their S-1 filings. They're incredibly profitable. They're an incredibly efficient company. I think they want to see if they can make these acquisitions work for themselves. Particularly as there just are fewer and fewer people in the world who don't already have Facebook accounts, it's harder to get growth that way. They might have to start looking externally.

I think investors are interested in the IPO and even beyond are really going to be keeping an eye on how they integrate Instagram into the Facebook family, and if they're able to do that successfully. If they are, I think that could bode well for the future of the company.

Stipp: Also this week, we got a very early read on earnings as Alcoa kicked off the first quarter earnings season. Were those results as good as they looked? It certainly seemed to cheer the market.

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