Facebook at $10 Billion Valuation, Microsoft to Invest?

http://online.wsj.com/article/SB119065193646437586.html?mod=hpp_us_whats_news

by bosshog • 19 years ago

22 36 19 years ago

online.wsj.com

axod• 19 years ago

Microsoft..... desparate?

uuilly• 19 years ago

Facebook..... obstinate?

mynameishere• 19 years ago

10 billion dollars? My god, if I was a major MSFT stakeholder, I'd be getting the tar and feathers ready.

falsestprophet• 19 years ago

Can Microsoft, with a $237 billion capitalization, or Google, $177 billion, could afford acquiring Facebook at $10 billion (nevermind the $15 or $20 billion that they seem to expect)?

(In any event, they seem to only want a small stake.)

Last I heard their revenues were less than $50 million. This puts their P/E ratio in the triple figures. The whole business seems too risky. I don't think I would sleep well if I had a lot of my money in Facebook.

comatose_kid• 19 years ago

P/E ratios in cases like this can be misleading - it is hard to predict earnings for what is the poster child for the social app phenomena.

Put another way, facebook isn't really focusing on monetizing its users yet - it is (rightly) focusing on becoming the platform of choice for the social web.

10B might be a steal in the long run if you believe a site like this is the future of content distribution or advertising.

pistoriusp2• 19 years ago

Isn't Vista enough of a reason to get the tar and feathers ready? ;)

breck2• 19 years ago

I disagree. Over 20 million people use FB every single day. Over 40 million active users(used it within 30 days).

They have something in there to monetize, big time. Watch, $20 billion today would be a steal. FB will be worth $100B in 3 years.

rms• 19 years ago

Agreed. A lifetime user of facebook is worth $500, easy. I don't see what is going to get me to leave the platform, ever.

zhyder3• 19 years ago

Keep in mind also that a strategic investor is always willing to pay more for the same stake than a purely financial investor.

This is because the strategic investor -in addition to reaping financial rewards- will also gain something else. In this case, it could be an exclusive agreement for Microsoft's ads, or use of MSN as the default search engine, integration of other MSN products, etc.

Even if Microsoft's deal puts a nominal valuation of $10B on Faceboook, Facebook's IPO (if it happened) could put the valuation lower.

Btw, this is an important point to note when evaluating exit strategies. Depending on the circumstances, getting acquired could be a much better exit even if the public markets are interested in your IPO. Youtube was probably not worth $1.6B based on just its financials, but it was worth that much to Google (or at least Dr. Schmidt thought so).

nickb• 19 years ago

Insane. Completely irresponsible. If I were a MSFT shareholder, I'd be pissed.

Just watch... Steve Ballmer will have some extremely hard time at the next shareholder meeting when questions start flying his way.

eusman2• 19 years ago

somehow this doesn't feel right.

Google is nearly impossible to replicate where as social networks is and will always be a trend. Also people tend to use more than one of these social networks.

PG pondered once in one of his essays, if I remember correctly, that naturally myspace or any other current social network will not be the only one in the years to come.

update: "So in a hundred years the only social networking sites will be the Facebook, MySpace, Flickr, and Del.icio.us? Not likely." http://www.paulgraham.com/startuplessons.html

The internet population is already 1 billion. Thats plenty of people and opportunities.

Microsoft and Google with all that money should just buy all the startups they can and kill Facebook for good...

Or we should just expect the new "Norton" to invent the NEW anti-"socialnetwork"/virus

zhyder3• 19 years ago

Facebook is harder to replicate than Google in one way: Facebook has a large network effect on its side, Google (search) doesn't.

aston• 19 years ago

That Google maintains its audience despite zero lock in is a testament to just how strong their search product is. I don't see Facebook opening up all of the details of their network.

bharath• 19 years ago

"Acquirers are less prone to irrational exuberance than IPO investors. The closest you'll get to Bubble valuations is Rupert Murdoch paying $580 million for Myspace. That's only off by a factor of 10 or so."

-- PG, circa Nov 2005

pg• 19 years ago

I was probably wrong in saying it was only worth a tenth of that, but I still think $580 million was high. Remember, what he bought wasn't the present-day Myspace. Most of Myspace's user base (and thus value) was added since the acquisition.

Jd3• 19 years ago

Something is worth whatever people are willing to pay for it, esp. in the case of internet phenoms.

steve2• 19 years ago

> Most of Myspace's user base (and thus value) was added since the acquisition.

Nah, the hot young promiscuous girls were there from early on.

zhyder3• 19 years ago

"Most of Myspace's user base (and thus value) was added since the acquisition."

How many of those new users were because of News Corp's acquisition? If majority of those users would be added anyway (if it was just a matter of time), and an astute investor could predict that, its valuation of $580m or even more would be justified.

Today most financial publications believe Murdoch got Myspace for a bargain.

kirse• 19 years ago

"Facebook, which is used by over 40 million people to set up their own personal Web pages...has emerged as the poster child for the latest Internet wave."

Yes, the latest e-Wave to hit the the Beach of Interweb e-Shores.

pistoriusp2• 19 years ago

Did anyone else notice this:

According to (people|person) familiar with (the matter|those talks|the company)

DougBTX• 19 years ago

It was painful.

greendestiny• 19 years ago

I hated facebook. From afar of course because I wasn't particularly interested in using it. Then, inevitably, someone wanted me to get on facebook, so I did. I hated the interface and the aesthetics, and really wasn't interested in making a pointless 'this is who I am' page.

But then a few interesting things started happening, my friends started using these little facebook applications (oh how much I hate the installing software analogy they've gone with is a whole other post) and I started using them as well. Like in the olden days (ie last year) when someone found a fun flash game and sent you the link and you sent your scores back and forth.

Like all these social networking sites its asynchronous communication with a low social overhead (your friends just happen to see what you're doing) and with lots of stuff to do. I think its going to become the internet for a large proportion of the population.

It might get beaten eventually, but in the short term the biggest potential challenger is google. If google leveraged the gmail user base to make orkut bigger and integrated it with igoogle widgets, it'd be something approaching facebook. I think they are somewhat reluctant to do that to their user base though, although it could be done unobtrusively.

Shooter• 19 years ago

IN OTHER NEWS: Bill Gates and Steve Ballmer were seen taking hits from a large bong outside the headquarters of the Redmond giant on Monday.

Ballmer was quoted as saying,"This wacky tobaccky is sooo good. Let's buy Dunkin Donuts for $20 billion! Mmmmm, donuts..." He then proceeded to do a Monkeyboy Dance, to the giggling delight of a baked Bill Gates. http://www.youtube.com/watch?v=Nc4MzqBFxZE

augy• 19 years ago

Fred says the 10billion is not real

http://avc.blogs.com/a_vc/2007/09/facebook-really.html

Facebook at $10 Billion Valuation, Microsoft to Invest?

Related Stories