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MySpace CoFounder Says Purchase Was A Scam
Jonathan writes "Brad Greenspan says he's the real founder of MySpace, not Tom, and the sale of MySpace to News Corp. was a criminal act. In a nine-chapter report, he describes how this was accomplished by hiding the value of the site from Intermix Media's shareholders." From the article: "How was News Corp able to turn $327 million into $20 billion or more of value within a year? The Myspace/Intermix transaction was so low compared to other internet transactions that it is raising eyebrows by analysts and media everywhere. Everyone seems to be asking how News Corp. got such a good deal. It seems too good to be true! After signing the transaction to buy Myspace & Intermix (but prior to the closing), News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid! "
Stop whining you miserable bastard, you made millions of dollars.
I once sold a computer for peanuts and saw its value rocket the day afterwards.
Should I consider myself a victim?
liqbase
Myspace will ultimately be worth nothing. Myspace is already past the height of its popularity, its just coasting on momentum which will run out eventually.
Religion is a gateway psychosis. -- Dave Foley
The company being sold was a corporation, so most likely, only a majority of the board of directors (and possibly the shareholders) had to agree to the sale. Greenspan was a minority shareholder, and apparantly was opposed to the sale. He can sue on the basis that the sale was improper and deprived him as a minority shareholder of some rights. Since there was apparantly a higher per-share offer made, he can argue that the board breached its duty to the shareholders by not taking the higher offer. The board probably has a lot of leeway, and Greenspan will have a hard row to hoe, but there's certainly a possibility that he's right, especially if the board misled the shareholders.
Si vis pacem, para bellum
The only thing more annoying than a Libertarian is an (un|mis)informed Libertarian
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Brad did happen to make $47 million for his share in the company. Now granted, that's a lot less than the $470 million he apparently thinks he's owed.
:)
Not bad for someone who was investigated by Elliot Spitzer for SEC violations
At the tender age of 30...
It all comes down to the author suggesting people knew stuff about the future of Myspace that the shareholders didn't know. But with quotes like this from the report:
."
"I bet if you extrapolate the numbers into Calender 06 (using 4thQ of our FY05 as the main driver) and include 3-5mm in cost savings the ebitda is in the 40-50mm range. Can someone please take a look at that asap. We will be valued off of calender 06 numbers
"Deutsche assumed that by 2008, Myspace would generate $100 million in revenue for that year."
And the fact the company was purchased for $580mm (according the PC Magazine article), shows that the company's valuation/sales price was appropriate.
Standard fare for M&A is 3-4x current year's revenues for a company. You can't value a company based upon what it *might* do next year (because every company likes to be very optimistic about *next* year's revenues!). So if Myspace was set to do somewhere between $60-100mm in 2006, then they got somewhere between 5.8x to almost 10x their revenues. These are already extraordinary numbers.
To suggest they should've gotten 20x or 25x 2006 revenues is a number nobody would believe.
And the reason for a "quick" close? A deal isn't done until it's done. All parties usually like to close as quickly as possible on a deal because it means neither side will get cold feet. Of course both sides also allow time for due diligence, a part of which is valuation.
But valuation of companies is more "art" than it is a science. Outside of the 3-4x revenue rule, valuations can be all over the map (hi Google!).
Or, imagine that for every computer that connected to your server, you needed another license! Oh, wait...
How to enable garbage collection on a system without protected memory: #define malloc() ((void *) rand())
That's bizarre. Not all pageviews are equal. IGN's pageviews are people who are researching what games to buy, and are therefore prequalified for IGN's advertisers (and a large percentage *will* spend money in that area in the immedaite future).
MySpace's pageviews are teenagers who have little income, and who are not prequalified for any particular product or service, so advertising return rates (and therefore advertising revenue) will be dramatically lower.
I don't know about the "it was stolen from me" angle, but the pricing comparison to IGN is such incredibly fallacious reasoning that it really reduces the guy's credibility in my eyes.
-b
If I wanted a sig I would have filled in that stupid box.