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  1. #1
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    Lightbulb Microsoft pays $240 Million for 1,6% stake in Facebook

    Read the whole story here

    This deal values Facebook at $15 billion with reported annual revenues of just $100 million. What does this mean for the online industry? Are we headed for a new bust, crazy valuations and irrational exuberance?
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  2. #2
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    I think it's important that people realize that while the deal mathematically makes facebook worth $15 billion due to the investment amount and the ownership returned, it does not mean facebook is actually worth $15 billion. Microsoft feels it will more than recover it's investment from the benefits given through the negotiated agreement. Whether or not anyone would actually pay $15 billion or anything close to it remains to be seen. One thing's for sure, it will be interesting to watch.
    - Ted S

  3. #3
    I meant that to happen silver trophybronze trophy Raffles's Avatar
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    I bet Rupert Murdoch is regretting buying MySpace.

  4. #4
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    Valuing it at $15 billion is the most accurate valuation one can get at the moment going by the investment already made in this business at this point in time. Of course a business is only ever really worth X if the price is paid for 100% of the ownership rights.

    In all likelihood Rupert Murdoch has made the deal of the century buying MySpace for just over $500 million. Yes, all of it not less than 2%!

    Unfortunately I can't find the actual reference to save my life but about a year and a half ago Peter Thiel bought a 5% stake in facebook for about $1.5 million.
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  5. #5
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    Quote Originally Posted by Raffles View Post
    I bet Rupert Murdoch is regretting buying MySpace.
    Why? He got a site that's bigger than facebook for less than what microsoft would have effectively paid for 5% of facebook. Sounds like a good buy to me.
    - Ted S

  6. #6
    phpLD Fanatic bronze trophy dvduval's Avatar
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    More and more we are seeing the big guys owning a larger share of the web.

  7. #7
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    One of the biggest buzzwords nowadays is the online desktop and facebook is regarded as being the best platform to run the online desktop. I think this is what Microsoft is after besides the ad space.
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    Wanna-be Apple nut silver trophy M. Johansson's Avatar
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    Quote Originally Posted by dvduval View Post
    More and more we are seeing the big guys owning a larger share of the web.
    Yes, but as I'e understood it, all markets (possible exception banking), are always made up mostly of small businesses. You are right that there is a trend for major SITES to be slurped up by dominant parties, namely Google, Microsoft and Yahoo. (I also strongly believe that Amazon will be an extremely strong player in the years to come) However, that does not mean that the major part of the internet will, at any point, be owned by the big three - I believe that the Internet (or rather, the information distribution and organization market) will eventually look like most other markets - a few big players on top, employing thousands of people, but the main bulk of the market made up of small businesses. I think the internet will be even more slanted towards small businesses as the cost of entry is naturally low.
    Mattias Johansson
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  9. #9
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    Yes Microsoft vs Google, they will pay anything just to get ahead of the other one. 15 Billion evaluation for facebook is ridicuous.
    Its not a business decision its a emotional one.

  10. #10
    Follow Me On Twitter: @djg gold trophysilver trophybronze trophy Dan Grossman's Avatar
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    The investment had nothing to do with ownership share, so the valuation is irrelevant to Microsoft. Microsoft gets two important things for their $240 million:

    • Rights to the US and international display ad space on Facebook
    • A chance to get Live Search in front of 30 million young users


    #2's got the most potential to pay off. Google is nothing without search - its profits from that are what fund all its other projects, and maintaining their market share position is the only way they can keep their stock rising and hold the majority of the search advertising income.

    If Microsoft can get Live Search in front of these users, and some of them find the new search engine (if you haven't been there in the past month, try it) actually gives them as good or better results than Google... just maybe they'll start using it instead. And they're exactly the demographic that leads change.

    Blocking Google from picking up all the searches of another major site, and getting their own search engine in front of those users, may well be worth as much as the ad revenue they'll bring in from this deal.


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