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Microsoft to Buy 5% of Facebook Valuing at $10bn
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."
$10 billion for a site that has 34 million active users ~= $300 per user. Hmm. I think this site is highly overvalued. But let MS waste their money if they want.
How the hell is Facebook worth $10 billion? Less than a year ago, they were estimated to be worth $1 billion...does anyone seriously think this site can bring in real revenue?
wikipedia reports 34 million users. this would it mean $294 per user... sounds a bit overpriced to me..
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.
Palm trees and 8
Maybe if we all *poke* Bill Gates, we can get him to stop.
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...just require 34 million active Facebook users (who are probably mostly young, rabid web users of other sites too) to install it.
How long till we see some cool new site feature -- or, hell, even an existing, basic feature -- reworked ("enhanced") to require Silverlight?
Mark Zuckerberg would like to keep it independent apparently.
In any case, register your complaint by joining this group
http://www.facebook.com/group.php?gid=6197556554
Everyone knows that joining a group on Facebook can move mountains and change the world...
Summation 2
Plus, Facebook uses Java to upload its images and Flash to play the videos.
.NET and Silverlight.
They'll be replaced with
Oh, and kiss goodbye to the mail account that you've registered with Facebook. Spam ahoy...
Summation 2
As long as I can still play Scrabble, I don't care!!!1
Actually, this input from Microsoft might help to fix the problems that Scrabulous seems to suffer every day... right, gang?? As you can see, I only use Facebook for Scrabble. There must be a group for me.
Facebook runs pretty snappy - begs the question of are many other projects using ASP.NET, JSP or other heavy duty systems where PHP on Commodity hardware would scale well. In any case I will be leaving if MS buys facebook.
of Ballmer and Gates doing Jello Shooters at a rager.
Great. Just another reason not to use facebook.
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. I know a lot of people who've been roped into 'signing' up to these sights in order to see their cousins christmas pictures, or to rsvp to a wedding shower where the idiot hosting it sent out the invitations via facebook.
So far: I don't have a facebook profile; I don't want a facebook profile; and I'm dreading the day where I have to get a facebook profile because I need to see someone elses effing facebook crap. I just know that sooner or later an important client is going to send me a facebook invitation that I'll -have- to register on the site to properly respond to...
I hate social^H^H^H^H^H^H viral networking sites.
I'm sure Steve Ballmer discussed this with Rupert Murdoch over drinks.
"So how are profits from your MySpace purchase, Rupe?"
"Oh, well ..." said Murdoch, looking nervous. "Actually, great. Great! It's going to be worth billions real soon now." He laughed icily at his own irony.
"Really? Because we were thinking of buying a stake in Facebook at Microsoft."
"Oh, you should totally do it," said Murdoch, grinning wildly.
"Yeah, we thought the developers would love using it on a sort-of group connection to MSDN."
"Do it! There's nowhere for these social sites to go but up."
"And we're thinking of extending the Welcome to the Social campaign to include it."
But Murdoch was laughing to hard to hear the rest.
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.
--
Microsoft Subnet -- the independent voice
Its sort of funny that myspace is so Microsoft loving ( .NET and SQL server), but facebook the Lamp Champ is the one now partially owned by MS.
Well.. maybe. Or Maybe not. But Definitely not sort of.
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.
As long as the number of competitors remains small (ie. 2), I think that Silverlight will actually boost the quality of web applications on ALL platforms.
Java's had its time, and frankly, while it's found niches in other fields, it sucks for web applets. Java applets need to disappear into the ether, resting alongside VRML. (Facebook IS in a pickle, because at the moment, Java probably is the best solution for multiple photo uploads...)
-- If you try to fail and succeed, which have you done? - Uli's moose
Though I really despise the ridiculous amount of profile clutter some of the more myspace-y users have, I don't think their opening up is a bad thing at all. Yeah, I was able to connect with a few people at my school and whatnot before, but after opening up, I was able to connect with far more people. Not everybody I know goes to school, and the increased universality seems to have compelled some of my friends who do go to school who hadn't joined previously to join. And thus far, Facebook has avoided some of the biggest plagues of myspace, which are bright backgrounds, music, and blinking text.
In any case I will be leaving if MS buys facebook.
;-)
Sure you will. Right after you meet that lass in a pub that wants to be your "friend...."
Well...your money won't be because the evil Jew bankers have it all and they are using it to bring in the New World Order.
Note to Mods: That was supposed to be funny.
Seriously though, you (the parent) might actually have a reputation to tarnish unlike the prospective puchasers of Facebook (Microsoft and Yahoo)...
Joe Llywelyn Griffith Blakesley
[This post is in the public domain (copyright-free) unless otherwise stated]
Face it we are being bought and sold like cattle. In this case MSFT is buying a place to plug in their future office live apps. A few updates down the road you will see the edit interface look like office live. This will mean that thousands of people are getting used to a MSFT product on Facebook and will use office live when they have to decide where to type their next document. Let's say Google buys Slashdot and changes the Post Comment screen to a docs.Google style screen (with awesome presentation style comment ability) then when it comes time to choosing a Word Processor in 3 years I'm going to choose docs.Google since I've already been using it on Slashdot and you will make the same choice. So this 5$ share is nothing more then MSFT buying future customers. They didn't buy the farm for the land they bought it for the cattle. ---- Mooooo....
... then we can expect similar groundbreaking, innovative improvements as we saw when hotmail was microwashed.
yes, we have no bananas
I don't see it happening. 5% is a far cry from majority shareholder. Especially if Google and other companies are buying in, as other folks have written. My (optimistic) guess is that there's no hidden agenda. Can't a company just invest in another company that looks promising?
Yeah! And can't a crackhead just admire your car stereo?
<xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
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.
Looked at another way, myspace has already been borged, Microsoft is merely corralling more sheep for branding.
Gerry
Facebook is nicely done. They keep everything lowkey. No blinking, no spam, etc. They appear to respect user's privacy.
Its what users who aren't children want. That is one of the reasons it got so many users. Well, that and the network effect. But niceness certianly helps. Of course, Microsoft knows nothing about making an application low key and pleasant to use.
All of your face are belong to us.
1/3 of jokes get modded OT. If you get the joke, mod 1 in 3 insightful/interesting/underrated to restore karma balance.
Sun was actively discouraging the use of applets over five years ago. The use of Java on the web has since been almost entirely server-side. There's no reason an applet is necessary to perform a binary upload. See Google's file attachment method as an example and Jakarta Commons FileUpload as the likely back-end to what is little more than a standard multipart form submission.
Just because the people implementing the technology suck doesn't mean the technology itself does.
Unlike Zuckerberg, Jobs actually innovated and evangelized real technology. Facebook rehashed a viral formula in a niche market and grew it successfully. Facebook is valuable because the site is popular, but this can change on the whims of a user-base. Facebook has made no significant technological contribution to the internet and overvaluing popularity is a huge mistake for long-term investments---it's almost like we don't remember 1994-2001 anymore.
Application servers like .NET are different -- heavy, with lots of metadata to make database development easier, and with a focus on object oriented language features (I don't develop much in .NET, but with JEE, pages are basically represented with objects, and data displayed on the page is represented by members of the object). What you aren't told is that decreased development time comes at the expense of decreased server capacity -- on the same hardware, a CGI website can support more concurrent users than an application server. There are scalability arguments for JEE and .NET, although those arguments are shot down with real data (the 2.6 series kernel features very efficient forking, on the order of O(1), and beats thread spawning on Windows!). It isn't very important for development on an intranet, since it is unlikely that you will have hundreds of millions of requests per day on an internal network, but for public websites, this consideration is very important (think Slashdot effect).
Palm trees and 8
Maybe this time around we can crowdsource a Web 2.0 revenue model to capture all those eyeballs, and implement it on a scalable platform using best-of-breed licensed and open source technologies.
I've come to see Facebook as being the "white pages" for eMail. People change their eMail addresses constantly - usually due to changes in employment or SPAM overload. What is needed is a way to find your friends current eMail address. This is the role that Facebook serves. If I need to send a message to a friend I can just use Facebook and it matters not how they have changed their eMail.
I'm not suggesting that this is a perfect solution but it does help explain the popularity of these sites. It is the reason why I joined Facebook.
Willy
I'm all for low-brow off-color humor, but there comes a point where a joke, even stated "ironically," isn't funny. Yours isn't funny, and it's because it lacks context. Over half your post is devoted to an inappropriate joke that doesn't have anything to do with your point. The fact that you have to throw a disclaimer in there should have been an indication that it isn't funny. Racist humor can be funny (in my opinion), but not when it's delivered like a knock-knock joke.
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".
Quite impressive that PHP was able to model itself on Microsoft software that didn't exist yet
Homme petit d'homme petit, s'attend, n'avale
According to the latest ish of Wired magazine, Facebook has 40 million active users (real people and not sock puppet accounts, thanks to the fact users can only view other's profiles upon confirming relationships) who generate more than a billion page views a day. Lately, Facebook has also been signing up 1 million new users a week.
Facebook also has that supercool Newsfeed feature which aggregates the latest activities on friends, family and associates, and manages to connect people who haven't seen each other in twenty years. Admit it, it's like nothing we've ever seen before (Myspace shouldn't even be in the same category).
I'm not a Facebook fanboy (alright, maybe I am), but I marvel at how well its connecting people in meaningful ways. It's a social universe within the internet. It's going to be bigger than money, because of it's worth and usefulness to you and I.
I don't like Microsoft one ioda, but they made a smart move here.
SEO Copywriter. Just Say ON
Um, not really...
.NET subsystem is extremely fast, but the $$ builds fast as you add machines.
Even with the mod PHP processes are hogs. However, no licensing costs. The
what about python? it can handle process forking and such to do uploads while displaying output to user... it can also handle all sorts of fun things... yumm...python. (and more importantly can run very efficiently on the same apache that runs php :D)
there's no way facebook is worth 10billion. they dont' produce anything.
If you mod me down, I will become more powerful than you can imagine....
Because it's an internet pissing contest for ad revenue. You don't have to produce anything as long as you can make your site popular and make the corporate monkeys think that people actually click on ads.
It really looks like another bubble, but I can't help but wonder how long this could go on. After all, most of the people throwing the money around are already rooted deeply into the ground and wouldn't suffer too much if their investments went bust.
I just read Slashdot for the articles.
I've refused to use Facebook (despite some pressure from friends) since they won't allow me to use my chosen email address, despite it being perfectly standard.
The problem is that I use 'plus addressing' (eg me+facebook@home.com) and their email validation scripts has a bug that claims it is invalid. It's not uncommon for validation scripts to have this bug, but most web sites are happy to find the bug and fix it. Not so with facebook - my impression is that they're just a little bit arrogant. So be it.
Yeah, I could not use plus addressing, or use some other account, but it hasn't got to the point where I want to bother yet. It's still annoying though.
Max.
What facebook produces is a social networking space, where users are convinced to enter information about themselves into a gigantic, glossy, friendly-looking, panoptic database. Those of us who are facebook users become the product - specifically, our attention for advertising becomes the product - and that is sold to advertisers. It's a reversal of traditional commodity based modes of consumption: rather than commodities being sold by a corporation, through a middle man to a consumer, the consumer's personal information and advertising potentialities are instead sold by a middle man to the corporation.
Simple.
I will have a sig when the market demands it.