Facebook may be worth $10 billion, at least to Microsoft, says the Wall Street Journal. Someone leaked to them that the two companies are in discussions to take a Microsoft investment of $300-$500 million for 5% of the company.
Here’s the (free) Reuters angle on the story. They’re saying Facebook may be holding out for a $15 billion valuation. What the hell. Why not?
The two companies have had an advertising relationship since late 2006. The WSJ is also hedging strongly on the story by saying that the discussions are still preliminary.
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Now it’s getting interesting! MS is in the social networking game after all. Watch out Google!
I have a bridge in Brooklyn for sale…
Wow, that is a lot of cash.
Agreed that Facebook is worth a whole lot, but seriously. These valuations are insane. The internet crowd is like a flash mob. Loosing them is just the next fad away.
I would seriously like to know how this is sane before the company has a viable business model. Please enlighten me.
LOL, can this bubble get any more bloated? Zuckerberg’s selling some pretty expensive kool aid. I mean I just don’t see why facebook is such a big deal, sure it’s valuable as is any site with huge traffic, but 10 billion!
Does anyone have any idea what facebook pulls in monthly? Does it turn a profit at all?
This is stupid. what does 5% bring anybody - you cant even call this an investment at this valuation!
Shiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiit !!!!!!!!!!!!
WHAT DA ???
The company is barely making any money …
For $500 million you can buy another social network and still have chage left to buy your own customers …
I think the problem wtih social network valuations is that they think the user will be there for life. So they have no problem valuing it at $300-500 per user…because they think they’ll get that money.
Personally I would say a user is only worth 10 bucks tops.
Microsoft writes checks this size on a regular basis to cover anti-monopoly fines, so going to the cash well (tens of billions deep) to cozy up to Facebook probably isn’t as big of a gamble as most think. 500 million is nothing to Microsoft. Missing a potential ‘big boat’ is.
This is ridiculous! I would value FB at $25B *at least*. Could be $30-35B if I were on board.
What is Microsoft going to get by taking 5% stake in Facebook is beyond me. however, they must have some reason, if this news is true. There are far too many of these kind of news that just come up for name sake…nothing materializes, except our imagination
Well good for facebook, but really, talk about kool aid, facebook is the AOL of Web2.0 and will likely suffer the same fate as the internet continues to evolve. Maybe the small investment by microsoft will enable them to more tightly integrate windows apps into facebook apps? I think that’s prolly smarter than trying to buy the whole company.
I would think MS sees Facebook as a platform and social network. They would probably know best about the value of user embraced platforms like Facebook. It will be interesting to see how the agreements work themselves out and how advertising deals will play out.
This news must be frustrating to Yahoo on all sorts of levels.
Facebook could have a higher valuation then Google in 5 years
As the YouTube buyout has taught us, it’s not about how well your business model works, it’s about how well your site attracts eyeballs. Whatever company controls the most eyeballs wins.
This is probably due to the fact that Google is looking to go the other way and top FB. So now MSFT wants to help FB defend itself.
This is just getting ridiculous.
Facebook offers no value that can’t be found elsewhere. Period. Most readers here are too technological-oriented to see that Myspace is still kicking Facebook’s ass.
Facebook doesn’t have any technology that’s hard to replicate, unlike Google, nor do they have significant technical expertise … in … well… anything. The only thing of value for Facebook is their network, and that’s not worth a $10bil valuation.
Being a recent college grad, I’m seeing usage of my casual Facebook friends dropping. If anything, it’s been really amusing to see my non-technical friends adopt facebook long before my technologically-oriented friends. The adoption curve in reverse?
Facebook is a great site, and it has some innovative ideas that appeals to people who would read TC, but… really.. .a $10 billion market cap? Please.
That’s a very impressive number. Considering the fibrillation of everybody in the tech / news / web space about Facebook these days…it makes sense.
However, as we’ve seen with other start ups, if they do something that makes them “uncool” then that buzz goes away.
ely - Not it could not. Google is a hugely profitable company, facebook is not.
mike - Had Google (or some other huge company) not bought Youtube it would have collapsed under the weight of it running costs and litigation. Even now it is a minefield for google, and is serving up millions of copyrighted videos everyday. A class action against youtube could well sink it and google too.
http://www.scribd.com/doc/2217.....l-Networks
Read up, and then try and claim that facebook isn’t “viable” or “profitable”…I’d posit valuations of 15-25 bil coming in by election time next year
Shane - As of right now it is not profitable.
Yeah I’m waiting for the 35 billion dollar valuation before I announce that I actually invented Facebook.
why not start a new site for 500 million and pay users to migrate from facekrook and myspam.
for 20 buks a head they can get 25 million users, and go from there.
25 million will bring at least 5-50 friends.. you do the math.
5-50 friends (each).. sorry.
Facebook has the potential to leave Myspace behind, just as Myspace did to LiveJournal. The opening of application developments to augment functionality is an amazing step in the right direction.
Live and don’t learn… It’s good to see that we learned nothing from the first bubble… Valuations based on a property’s audience, not revenue or profits… excellent work! Seriously, Zuckerman has a chance to be Mark Cuban 2.0 if he dumps this when he has the chance.
FB is certainly going thru the hype phase and it too will eventually go thru the backlash phase. MS already invested a tiny amount in FB in the beginning stages. What matters now is that there be a counterweight to Google. Google is becoming too powerful, controlling too many pieces of the internet pie. Dont know that even an MS + FB combo will be good enough.
- Pandu
@ http://www.fewtureweb.com
I tell you, my little entrepreneur, if you redesign the whole orkut site with an open API to create mashups and weblets, google would be number one in the social arena.
Facewhat? people goes with the best, and that, my friend, is google.
Oh, btw, change that absurd and stupid name from orkut to google mash.
Suckerberg will be sorry he didn’t sell early…
You see all of the big exec’s know how this works (It’s called the 16 steps plan:
1. Resist Microsoft (gain a rep)
2. Become almost cultishly blind to the realities surrounding you.
3. Release some cool products (declare them to be cool anyways)
4. Lose money hand over fist every quarter for a few years.
5. Blame Microsoft
6. Hint at softening your stance (but deny it in public)
7. Sneak into Redmond, beg me for help, bow before me
8. Wait 6 months for a reply
9. Announce a “strategic alliance” new era of cooperation and understanding
10. Open some of your source code to us
11. We release favorable press releases about you (your stock goes up)
12. Once we have “absorbed” what we wanted and made simmilar apps which don’t work quite as well, we announce an end of the alliance and blame you!
13. Your stock plummets to record lows
14. We offer to Buy your company cheap … but CEO gets sweetheart deal.
15. Buy, downsize, dismantle, assimilate remainder
16. Deny your company ever existed.
http://fakesteveballmer.blogspot.com
I think a portion of the reason why MSFT is doing this is to screw over its competitors.
Think about it…they get in with 5% @ 10 billion valuation. Deep down they know its not worth 10 billion. But now if Google or Yahoo decides to buy Facebook, they would have to cash out 10 billion for it. Its the old case of…if I can’t have it…noone else can have it too.
Also another reason…with 5% they no doubt have some control in the company…which means they can pressure facebook to integrate some of their technology into facebook. Integrate some of its ads etc.
At this type of valuation what sort of return is Microsoft expecting (if any). Will they get a board seat?
“They’re saying Facebook may be holding out for a $15 billion valuation. What the hell. Why not?”
LOL classic.
@#16 - agreed.
If MS does buy FB is not for the traffic only but for the operating environment. You need to understand that SaaS is a reality and MS lacks a good play on that and a good way to compete with Google. Getting FB as part of their portfolio gets them on the same footing with Google but from a different angle. Google recognizes their weakness and risk and are trying to deal with it.
If MS owns FB, they are back in the game.
1) Desperation
2) Just Silly
Winners: Zuckerberg and Peter Thiel
Loser(s): Microsoft’s Balance Sheet and Microsoft Shareholders
No Board seat for Microsoft.
FB has multiple offers in the $6-10 B price range, so this is the market price (I am aware of at least 4 offers).
cheap. its worth more. someone will pay up and beat out msft
Mike had talked future evil empire - Mark Zackerberg. Why Microsoft need to buy Facebook?
Here why… Bill Gates is getting old. No one will control his role stronger and powerful. Mark Zackerberg maybe the most powerful evil jedi ever know. Mark will join darkside. Bill Gates will train him with super power.
He would kill yoda company — “Google” Mark would take care Live.com.
Is Google guy scared?
You bet they are. They don’t have WEBOS. Hey, Google guys… Use the force…
Thats a lot of $$$$$$$$$$$.
http://vidsonly.blogspot.com
Well… Are they making any profit/revenue at the moment?
You know what’s Facebook secret. The whole thing is written PHP. If facebook was written classic ASP. He could become instant billionaire.
It’s hard to write FACEBOOK clone with Asp.
This is exactly what Google wants to hear. Let Microsoft blow a bunch of money on an investment that is worth 5% on a site that may or may not be profitable. Google will open Orkut up and with it having the second most popular social network in the world, it’s obviously not hard to imagine that they can boost it’s popularity in North America (yes, Canada matters!).
This is the thing about Google. Sure its Apps and Docs aren’t knocking Office down, but they are making headway. It’s the same with Checkout, it isn’t taking Paypal down a couple of notches…yet. But when they boost the functionality to near Office and Paypal levels, popularity will increase as will adaptation. That is something Microsoft (especially) and Ebay should be fearing.
i am excited about this. I really wanna know how it is going to end.
The Grinch- I’ve actually heard that internally, they claim to have cleared 30+mil in profit last year and make 1mil per month on virtual gifts alone…the bear sterns report seems to bear out this claim, no pun intended with cash on hand estimated at 26mil at the end of 2006.
I think fb investor should get some cash first before all fb users kill their own accounts. I know many ppl are doing that already.
As expanding as facebook is, I still would have taken the $1B offer from yahoo. That would get rid of all risk, and you would be set for life. Expecting anything more is pretty greedy, although I wouldn’t doubt he will do it.
Is this a signal of .com bubble 2.0?
WordHugger–You are dumb. yahoo recently offered 6x that.
What. The. Frack.