The Start of the Space Race and Facebook's World Conquest

The Start of the Space Race and Facebook's World Conquest

On this day in economic and business history...

An artificial moon -- that is, a human-launched satellite -- twinkled in the sky above the Earth for the first time on Oct. 4, 1957. That day, the Russian-built Sputnik 1 entered orbit, announcing to the world a new age of space travel with each faint beep of its radio signals.

American reactions were diverse. The Washington Post reported that one top scientist was "elated that it is up there." Rear Admiral Rawson Bennett responded with an entirely different tone, dismissing the satellite to The New York Times as a "hunk of iron almost anybody could launch." Sputnik 1's orbit disintegrated, and it burned up in the atmosphere three months later, far exceeding the three-week time period most had expected it to remain aloft.

The successful Russian launch lit a fire under the American space program, and the U.S.-built Explorer 1 reached reach orbit a mere four months later. NASA was created a year after Sputnik's launch to put the U.S. in the lead in the space race. It was only 12 years after Sputnik's first beep when two American astronauts touched down on the surface of the Moon -- a remarkably short time by any sensible measure.

Sputnik wasn't the only craft to set a spaceflight milestone on Oct. 4. Burt Rutan's SpaceShipOne won the Ansari X Prize race to create a reusable private spacecraft on Oct. 4, 2004, when it completed its second successful flight beyond Earth's atmosphere.

Birth of the PC
The first "personal computer" was offered to the public on Oct. 4, 1968. Hewlett-Packard was the first company to use the term when it advertised its HP 9100A in that week's issue of Science, a leading scientific journal. The 40-pound, $4,900 machine offered professionals their own dedicated computing platform, freeing them from a reliance on the massive mainframes that dominated the era. The HP 9100A could perform trigonometry in a mere 330 milliseconds per function, which was impressive at the time for something released a decade before the first true PCs hit the market.

Barbarians at the gate
The corporate raiding of the 1980s was on full display on Oct. 4, 1988, when British liquor giant Grand Metropolitan made a hostile offer to buy Pillsbury for $5.12 billion. Grand Met, which you now know as Diageo , offered Pillsbury a 53% premium over its previous closing price of $39 per share. Many analysts thought the offer was more than fair, and one estimated Pillsbury's "break-up value" to be roughly $50 to $54 per share.

Grand Met eventually succeeded in its efforts later that year despite Pillsbury executives' attempt to implement a poison pill to prevent the takeover. The final deal, worth $5.7 billion, went through after a judge in Delaware rejected both the poison-pill strategy and Pillsbury's desperate attempt to spin off fast-food subsidiary Burger King to reduce its appeal to the British firm.

Grand Met, which merged with Guinness in 1997 to become Diageo, never made the most of Pillsbury's diverse operations. Burger King, neglected by its corporate parent for more than a decade, was eventually sold off to a group of investment firms for a modest $1.5 billion in 2002. Pillsbury's manufacturing and distribution assets were quickly divested after the Grand Met acquisition, and even its brand assets wound up being sold after the start of the new millennium. A $10.5 billion sale, completed in 2000, sent Pillsbury to General Mills, which kept the brand's refrigerated lineup but sold Pillsbury's Doughboy-fronted baking products division to J.M. Smucker.

The Pillsbury and Burger King divestitures work out to an annualized return of just more than 6% for Diageo over the life of its acquisition. This period of ownership took place during the greatest bull market since the Roaring 20s -- the Dow Jones Industrial Average produced annualized gains of 14.6% over the same 12 years following Diageo's hostile takeover -- so Pillsbury turned out to be a rather disappointing investment for Diageo.

The whole world is social
Facebook founder Mark Zuckerberg announced that his social-networking site had surpassed 1 billion active users on Oct. 4, 2012. His announcement, posted to the official Facebook blog, read:

Helping a billion people connect is amazing, humbling and by far the thing I am most proud of in my life. I am committed to working every day to make Facebook better for you, and hopefully together one day we will be able to connect the rest of the world too.

Facebook, launched in early 2004 at Harvard University, reached a million users before that year was over despite restricting itself only to university students. MySpace, which had launched that same year, was already up to 5 million members. A little over three years later, MySpace peaked at over 150 million members, but Facebook had barely passed 25 million users. But the tables were turned from then on: Facebook crossed the 250 million-user mark in mid-2009, shot up to 500 million users in mid-2010, and doubled its user base again to a billion users little more than two years later. Facebook's meteoric rise made it by far the most valuable property in the world of Web 2.0. Five months before crossing the one-billion-user mark, Facebook went public in the largest IPO (by the size of its first-day market cap) in history.

Growth has slowed somewhat for Facebook, which had signed up more than 40% of the world's Internet users -- and roughly 54% of the world if you exclude users in China, which blocks Facebook -- by the time it crossed the billion-user barrier. Roughly nine months after its billion-user announcement, Facebook's total user base had increased by another 150 million people. How many people will sign up before growth stops -- if it ever does?

Facebook vs. the world
The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. Facebook is just one of the companies that have entered the ring, but to find out which of these giants is set to rule the next decade, can claim your free Motley Fool report that answers the question: "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out who is set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

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Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Burger King Worldwide, Diageo plc (ADR), and Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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