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#11
10-24-2007, 07:34 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
[ QUOTE ]
[ QUOTE ] $15B sounds just terrible from what I know, which is obviously not near as much as those guys. I mean, no one has even showed FB making an operating profit yet. Like I mentioned in a thread earlier about a $750M valuation, MySpace only made $10M on $550M revenue. And that's a site with more users and not plagued by the scalability problem facing FB where you can't have more than 5,000 friends. It'll be interesting to see how this turns out. [/ QUOTE ] Why does everyone keep mentioning that? Who the hell has more than 5,000 friends...? [/ QUOTE ] Also, facebook blows myspace out of the water. That being said, a $15 billion valuation seems ridiculous to me as well. BUT, it could be worth it for Microsoft to pay $240 million in an attempt to drive up the asking price enough to keep competitors out while getting an exclusive ad deal with facebook. 
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#12
10-24-2007, 07:53 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
You have to ask yourself one question to judge wether this is a good investment or not for Microsoft.
For a company that has a market share of 95% in how people use computers, what is it worth to know; - Who knows who - What people like - What people do Facebooks database must for sure be the most valuable item on earth. As far as i am concerned, it`s not about how much it is actually worth, but only about who is willing to do what it takes to aquire it first. In this picture, 240 million us is nothing.
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#13
10-24-2007, 07:56 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
Makes sense from a microeconomics point of view.
Oh, and close to everyone in this thread is under-estimating the potential profitability of online advertising.
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#15
10-24-2007, 08:16 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
[ QUOTE ]
[ QUOTE ] $15B sounds just terrible from what I know, which is obviously not near as much as those guys. I mean, no one has even showed FB making an operating profit yet. Like I mentioned in a thread earlier about a $750M valuation, MySpace only made $10M on $550M revenue. And that's a site with more users and not plagued by the scalability problem facing FB where you can't have more than 5,000 friends. It'll be interesting to see how this turns out. [/ QUOTE ] Why does everyone keep mentioning that? Who the hell has more than 5,000 friends...? [/ QUOTE ] The celebrities who drive traffic to myspace by using it as a blog and listing concerts, comedy shows, appearances, etc.
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#16
10-24-2007, 08:21 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
i read a great article in the economist about this. they were of the opinion that it is very much overvalued at 10billion.
the main issue comes from the different kind of network externality. in a typical network (like a software or mobil phone platform), the more people who use it, the more valuable it is. but with friendster, the individual accounts don't get more valuable after they have a certain # of friends. in fact, they can get LESS valuable since the extra information isn't worth nearly as much or whatever. im quoting from memory so sorry if i get the logic wrong (not a network guy myself). the bottom line is that facebook doesn't offer a new product...it just offers fantastic features... Barron
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#18
10-24-2007, 09:01 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
[ QUOTE ]
$15B sounds just terrible from what I know, which is obviously not near as much as those guys. I mean, no one has even showed FB making an operating profit yet. Like I mentioned in a thread earlier about a $750M valuation, MySpace only made $10M on $550M revenue. And that's a site with more users and not plagued by the scalability problem facing FB where you can't have more than 5,000 friends. It'll be interesting to see how this turns out. [/ QUOTE ] Nobody knew how much money Google was making until it went public in 2004. There are a lot of factors at play here that are hidden to the public eye.
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#19
10-24-2007, 09:25 PM
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Re: Deal values Facebook at at least 15 Billion Dollars
[ QUOTE ]
i read a great article in the economist about this. they were of the opinion that it is very much overvalued at 10billion. the main issue comes from the different kind of network externality. in a typical network (like a software or mobil phone platform), the more people who use it, the more valuable it is. but with friendster, the individual accounts don't get more valuable after they have a certain # of friends. in fact, they can get LESS valuable since the extra information isn't worth nearly as much or whatever. im quoting from memory so sorry if i get the logic wrong (not a network guy myself). the bottom line is that facebook doesn't offer a new product...it just offers fantastic features... Barron [/ QUOTE ] Great post, pretty much sums up a lot of what I am thinking but not able to put into words very well [img]/images/graemlins/wink.gif[/img] Do you know which issue of the economist this was in? I must have missed that one. One thing to add, is that while myspace/facebook are extremely popular right now, they have yet to prove they are able to stick around long-term. They are definitely more susceptible to being a "fad" site where a majority of the user base can easily migrate to whatever happens to become the next fad. (By no means am I suggesting this site will disappear overnight -- just eventually its coolness factor is going to wear off and/or if a "better" social networking site is created it won't take long for that to become immensely popular and steal a lot of facebooks users). I'm not sure if I am wording that correctly, and am by no means suggesting facebook is going to go away anytime soon. But sites like these have very low barrier to entry and if they catch on, grow like absolute wildfire. That being said, I think facebook is a great improvement over myspace, but there is still a lot that could be improved upon. Also I can't imagine they are making anywhere near enough money to be valued at $15 billion. I think Microsoft is just willing to overpay in attempt to prevent the competition from getting even farther ahead of them in this area.
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