P.S RIGHT BACK NOW

P.S RIGHT BACK

Acquisitions that are done as stock swaps are obviously not the same as cash transactions. Public companies often use their stock as trading currency for acquisitions since it has no cash impact on their business. However, stock transactions dilute the value of other shareholders, sometimes significantly. In a rising stock market no one really notices because the steady share price increase masks the dilution. When the stock market turns the problems are exposed…and magnified.

I wrote a blog about the psychology of acquisitions, and related it to this deal. See http://dondodge...rade_my_tw.html

To see what this is worth, check out a comparison of the google searches for both: http://www.goog...ll&date=all

Also, I’m sure growth rate was a major factor. Youtube was founded two years ago. Photobucket took four years to get where it is now.

People count comparison: http://snapshot...e.com?metric=uv

Photobucket is not addictive. It’s not a destination site. It benefited from a cultural move that found MySpace people using it host mainly pictures and avatars — and to a new degree video. Without MySpace and their traffic photobucket was far from compelling. The image size limitations made it a place where serious photographers would not socialize.

Photobucket has far more images than Flickr. More than 5x more. But with the recently announced integration of Yahoo Photos into Flickr, Flickr will soon get close.

Flickr’s images ultimately are more meaningful though. More meaningful because they come with a community and as a destination site. They are also far more complete in terms of organization (tagging, ranking, interestingness etc.) This has far more eventual value in the world of search which neither Photobucket nor Flickr have scratched the surface yet with.

If $250 million was the bargain of the year for Fox interactive, then $35 million was the steal of the decade for Yahoo when they bought Flickr.

The question remains though who will ultimately dominate the world of community photosharing for the rest of the non-English speaking world. That is a much larger prize than either Photobucket or Flickr today.

Bought in 05/2005 for $580 mil,
in 2006: they had $200 mil in revenue (per NYT),
in 2007: MySpace is now generating in excess of $30 million a month in revenue, with about $24 million in domestic revenue and $6 million internationally. He adds that monthly revenues should more than double over the next 12 months, and “at very high incremental revenue margins.” So in 12 months, he’s saying, MySpace should be doing more than $60 million a month in revenue, for an annual run rate in the neighborhood of $750 million a year.
(per Barron’s Online)

Per FT, MySpace also has a three year $900 mil ad deal in works with Google.

Combined 2-year revenue would be twice as much as the investment was (not sure what the profit number is).

Photobucket is being bought at 10 times revenue.

Youtube was bought at N times revenue.

If MySpace/News Corp are able to add as many banners to Photobucket as MySpace has, the revenue may go up and pay the investment back faster, but Photobucket’s community may not be as happy and react by gradually switching to other services.

Still, out of all acquisitions so far, MySpace is the only one that really “made it’ and made financial sense (vs. stratigic, … be the first/largest in its category, … and so on)

Good luck to them to integrate Photobucket and make financial sense out of it as well.

Because the folks at Google are arrogant prima donna’s that’s why. Ask anyone who has had to deal with them including Viacom.

Here is a question for you all. How come YouTube is being sued by everyone but MySpace and other sites that host user posted videos don’t seem to attract the same rath of content producers such as Viacom?

yeah they shouldda developed a Photo UpLoadr in house fer a coupla thouw*

;PPP