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Old 09-26-2007, 09:50 PM   #1
Czar

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Default Is Facebook worth $10 BILLION?

One of the champions of the Web 2.0 movement, social networking site Facebook has made massive strides in building their audience during the past two years. The site has grown into a social phenomenon and famed time-waster but, in doing so, it has also managed to eek out a decent profit margin.

It's the company's profitability, rapid growth and superstar status within the Web 2.0 world that has drawn the attention of both institutional and corporate investors. And while the company's founder has stated his determination to keep Facebook fiercely independent, until such time as it's ready to go public, two of the biggest players in technology have reportedly come knocking lately.

It is suggested that both Microsoft and Google have initiated early-level talks with Facebook, to help secure not only lucrative advertising exposure throughout the property, but to assume part ownership in order to further increase their ties with this site's massive audience and behavioural database.

One report has suggested that Microsoft has been working on a bid for 5% of the company, in exchange for $300-$500 million. If that deal went through, and at the upper end of the proposed offer range, it would value Facebook at $10 BILLION. Not bad for a service that started as little more than an innovative socially-oriented intranet just a few years back.

The company is presently thought to have made a $30 million profit this year on revenue of $150 million.

So all you Web 2.0 gurus out there now have something to which to aspire.

Do you lads-n-lasses see either of these deals going through? And what are your thoughts about Facebook being valued so aggressively? Can they continue to outstrip the growth of MySpace and other competitors far enough to maintain their rapid rate of growth in coming years?

Gotta love the second .com boom.
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Old 09-29-2007, 07:40 AM   #2
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Not $10 Billion, that is way too much I think.

And yes the second dot com boom is coming along nicely, this time the internet is a lot more stable.
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Old 10-01-2007, 04:09 PM   #3
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10bil is an insane valuation for that company. We already have eBay suddenly realizing the 2+bil for Skype was a tad much and the stock holders cashing out early.
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Old 10-01-2007, 04:32 PM   #4
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Yeah, I only just heard about the eBay/Skype write-down a few hours ago. Adotas picked up a good New York Times editorial on how eBay has been forced to devalue Skype as a result of the division failing to come close to revenue expectations, despite elevating its 'free' userbase dramatically since the acquisition:
http://www.adotas.com/2007/10/ebay-a...up-and-charge/

As with Facebook, Skype maintains a strong position of leadership in a burgeoning market. I guess that lesson tells us that, at the end of the day, if the numbers don't match the hype, a honeymoon valuation can just as easily be seen as folly. Fortunately, Facebook is more profitable than Skype, on a percentage of earnings, but it could still suffer a similar adjustment unless it grows its revenues along with its userbase.
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Old 10-04-2007, 03:21 PM   #5
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Interestingly, Microsoft CEO Steve Ballmer came out this week and referred to social networks - including Facebook - as "fads". He compared Facebook to Geocities, which many of you will remember as being one of the first and most feature-packed "free web hosts," suggesting that Facebook possesses nothing inherently new as far as technology goes.

Perhaps this suggests that Microsoft will develop their own social network, given Ballmer's expectation that a new network could be developed quickly and that 'faddish' users of these networks may be fickle enough to switch without too much resistance. On the other hand, perhaps his statement was just designed to lower expectations that MSFT is willing to make such a hefty investment into Facebook, in exchange for such a small equity stake.

For more on Ballmer's comments, see this:
http://www.adotas.com/2007/10/ballme...acebook-a-fad/
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Old 10-04-2007, 04:27 PM   #6
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I just thought of something, maybe they don't think that shares alone are worth that much, but instead there is also a bit extra to convinse them to sell part of the company. When there is a full buyout to complete the deal the side being paid off tends to get perks or benifits, like contracts to continue at thier job, promises to thier customers that they will still get the same great service(not, but they pretend...). So just maybe there is extra money in that deal to convince them to sell out, if only a small portion.
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Old 10-05-2007, 03:53 PM   #7
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I do think these networks are a flash in the pan so to speak. Just like geocities they will be around for a long time to come but I don't see them as being so popular as they are now in 5 or 10 years unless they evolve with their userbase.

As for the users being fickle or it being easy to clone their service, there's a reason why companies are willing to pay up to $100-200 per unique registered person on various sites. It's extremely hard to make a site popular and build that critical mass to compete in an established market no matter who you are.

We've seen it time and time again where companies like Yahoo, Microsoft, or Google would try to clone and compete with an offering from a rival and they'd have to close it down after a year or two due to lack of uptake from the market.
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Old 10-17-2007, 04:13 PM   #8
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That's quite funny really. It has grown to be a very popular site, but I have never used it or even visited it yet.

I think I am getting a little behind on the web, lol.

I know youtube went for a large sum. Even though I have not seen it, I roughly have a good idea what the concept is about and would think it is not worth that much.
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Old 10-24-2007, 05:44 PM   #9
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Default Microsoft to pay 240 million dollars for Facebook stake

It has been announced that Microsoft has won over Google and Yahoo and will pay 240 million dollars for a 1.6 percent stake in Facebook. This puts the value of Facebook at 15 billion dollars.

For the past few months Microsoft, Google and Yahoo were all interested in investing in Facebook and having a closer relationship with them.

Here are links to article that have the full details:

http://www.pcworld.com/article/id,13...s/article.html

http://www.nytimes.com/2007/10/25/te...2a3&ei=5087%0A
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Old 10-24-2007, 05:51 PM   #10
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Holy moly. That makes Steve Ballmer look as little silly, not that this would be the first time (see Steve Ballmer's Funky Monkey Dance).

I guess Facebook's not worth $10B after all. What were we thinking? We're clearly not as irrationally exhuberant as the rest of the Boom 2.0 market.
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Old 10-24-2007, 06:33 PM   #11
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The only value I see for MS is the fact the 240million bought them an exclusive agreement to provide the advertising for facebook internationally (they already had an agreement for US advertising). So they've wrapped up Facebook as the sole provider for their advertisements beating out Google.

That stays within MS's strategy of throwing money at other companies to help block or hurt competitors. In this case it bought them some extra business and blocked Google from that revenue.

Still, was it worth that much $$$?

Also how irresponsible is it for the analysts and media to throw around the 10bil figure just because MS was crazy enough to gift Facebook with that much for a tiny stake.

Remind me to do a Web 2.0 startup get some press and have a wealthy friend invest at 100x the going valuation to get a astronomical valuation which he can then cash out of at a later time.

Apparently nobody learned from the last dot com boom and bust to base off of actual revenue figures.
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Old 10-29-2007, 12:25 AM   #12
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facebook can not make much money .it is only a trend!!!
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Old 10-29-2007, 12:40 AM   #13
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The site did generate upwards of $150 million this year, so they do make a reasonable turnover; just not as much as this 'valuation' would suggest.

There has been some talk this week that Microsoft expects Facebook to generate more than $200 million from display advertising revenue next year which, coupled with their direct sponsorship sales, could bring revenues above the $500 million mark, if they manage to outlive the average fad by continuing to grow.
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Old 11-05-2007, 05:58 PM   #14
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The interesting (and potentially quite lucrative) thing about Facebook is the advertising opportunities that it opens up. Facebook has so much data about each of their users that you can really target advertising on Facebook better than you can most other places on the internet.

I think that does add quite a bit of value, but $10 Bln is probably too much.
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Old 11-05-2007, 06:56 PM   #15
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Social websites have been trumpeting that capability to target advertising for years in order to maximize revenue and all we've seen the entire time has been bottom of the barrel seizure inducing Smiley advertisements plastered across their properties like MySpace.

They really need to put up or shut up.
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