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Microsoft to Buy 5% of Facebook Valuing at $10bn

Posted by ryuzaki0 on from the wish-i-had-a-billion-dollars dept.

l-ascorbic writes "The Wall Street Journal is reporting that Microsoft is poised to buy 5% of Facebook for $300 million to $500 million, valuing the company at up to $10 billion. Microsoft already handles advertising for the site."

7 of 216 comments (clear)

  1. Re:wow by betterunixthanunix · · Score: 4, Informative

    Probably because it would cost so much for FB to migrate to .NET (or any application server). Think about how much traffic FB gets -- now think about how much extra hardware they would need to aquire to switch from a CGI-esque technology like PHP to a big and heavy AS like .NET, let alone the man hours needed to recode everything.

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    Palm trees and 8
  2. Google is already poking him by Julie188 · · Score: 2, Informative

    Here's a story also that adds that Google is talking about investing in Facebook. Makes it sound like Microsoft's move is just another way to get back at Google. (Did you know Microsoft has started a "consortium" to try and block the Google/Doubleclick merger -- only no other companies will join so far?) Another tug-o-war between the two and Facebook developers wind up rich? The reports sound like nothing more than rumors, even if they do come from the WSJ.
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    Microsoft Subnet -- the independent voice

  3. Re:wow by daveschroeder · · Score: 2, Informative

    I know your post was sarcastic, but any mac users dealing with the agonizing slowness of their photo upload applet should be cheering for joy if what you're saying is true.

    Flash on Mac isn't all that hot either. Adobe's more or less been shitting all over the platform ever since Apple started directly competing with them. A single Youtube video can easily suck up 80% of the CPU cycles on a modern Core Duo machine.

    You do know about the official Mac OS X-native FaceBook Exporter for iPhoto, don't you? It's that kind of integrated app that makes the user experience with Facebook nice, not things like Silverlight.

  4. Re:How many real users? by HarvardAce · · Score: 2, Informative

    As for the number of users, I wonder how many of them actually USE facebook, vs simply having registered in order to see someone elses crap. According to Wikipedia, 60% of users log in at least once per day. This number is probably a little old (my guess is the number has decreased as more and more people have joined), but even at half that number it is still impressive.
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    Note to self: Stop putting jokes in my insightful comments so I can get something other than +1 Funny!
  5. Re:20002 called. by Xtravar · · Score: 5, Informative

    There's no reason an applet is necessary to perform a binary upload. Facebook resizes the photos before uploading them.

    1. They are saving a ton on storage and bandwidth by doing this.
    2. They are saving a ton of Sally's bandwidth by doing so (since she has 800 pictures of her and her friends drunk on Facebook).
    3. They are saving a ton of Sally's stalker's bandwidth (who would inevitably download all of her photos in hi-res).
    3. UI: Users can easily browse to and check off which photos to upload, with thumbnail previews, which is much nicer than any other non-Java upload system out there.

    They do, however, have a HTML form fall-back in case you don't want to use Java. But frankly, it is the most convenient, transparent, and well-designed Java applet I've ever run into. In fact, I'd hypothesize that Facebook's photo system is a success precisely because of the Java applet.
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  6. Earnings are not the same thing as Revenue by sjbe · · Score: 2, Informative

    ...a 10:1 P:E ratio is far from unlikely


    Earnings are not Revenue. Earnings are profit. Revenue is total sales. It's VERY important that you understand the difference. Companies are not valued based on their P/E ratio. The only real use of a P/E ratio is to determine if a stock price is relatively high compared to similar companies. It tells you nothing about how much the company is actually worth. The market capitalization can be important (if the company is publicly traded) but the P/E does not give you a value of the company in any meaningful way.

    P/E ratios also have NOTHING to do with revenue multiples and aren't used directly for acquisitions. When one company buys another they rarely are looking at the P/E ratio. In fact if the earnings are negative the company will not have a P/E ratio! Typically the buyer will offer some price based on some multiple of the annual revenue (usually 1-2X) or preferably the EBITDA if the company is profitable (typically 5-8X). For example if the company has annual revenue of $1,000,000 and EBITDA of $150,000, the buyer might offer between $1,000,000 (1X revenue) and $1,200,000 (8X EBIDTA). In cases where only a portion of the company is purchased you get an implied value (how much the buyer thinks the company is worth) based on their offer. If you were to offer $100,000 for 10% of the company you are implicitly putting a value of $1,000,000 on the company.

    Right now we're in a bit of a speculative mergers and acquisitions bubble so valuations have been rather high lately. But make no mistake, offering 10X revenue for a company is a VERY generous offer. If someone offered me 10X revenue for a company I owned I'd sell faster than you could say "generous multiple".

  7. Re:wow by Anonymous Coward · · Score: 3, Informative

    Um, not really...

    Even with the mod PHP processes are hogs. However, no licensing costs. The .NET subsystem is extremely fast, but the $$ builds fast as you add machines.