All
Microsoft has purchased a 1.6% stake in Facebook for 240 million dollars, valuing Facebook at 15 BILLION dollars. What are everyone's thoughts on this and does anyone think this is, uh, how do I say it...a slightly optimistic valuation?
http://www.sfgate.com/cgi-bin/article.cgi?file=/c…
Any thoughts?
| +370 | Evercore Intern Seizure | 54 | 14h |
| +71 | JPM M&A is Gone??? Purely Coverage Banking??? | 31 | 13h |
| +62 | Is DCM actually underrated ? | 24 | 1d |
| +51 | How do I understand vs. just memorizing? | 8 | 4h |
| +48 | Losing my personality in Banking | 9 | 1d |
| +47 | Are all Tech / TMT groups sweaty? | 38 | 1d |
| +42 | Associate & Above IB exits | 16 | 4d |
| +33 | Incoming IB Analyst: Best Ways to Prepare? | 11 | 5h |
| +27 | Which groups are ideal for laterals? | 12 | 1d |
| +24 | Thoughts on PEI Global Partners? | 4 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
No one would pay $15 billion en bloc for Facebook. $240mm isn't much for MSFT and the strategic value is pretty high. I'll put it this way. I don't think MSFT would have ever paid that valuation if it was a 10% stake. The marginal strategic value from a greater stake diminishes quickly for them. It's $240mm for a stronger relationship.
From Microsoft's point of view it's not a huge commitment, although if this is the best use they have for cash perhaps they should be returning it to shareholders instead. What's depressing is that this deal will be followed by a hugely oversubscribed IPO at an utterly unsustainable valuation. People never learn.
I agree wholeheartedly, valuations int his case are extremely biased...15 billion?
Mark Zuck....(whatever) wants to wait 2 more years AT LEAST before the IPO. Thinking if he can expand more in Europe and get more ad revenues in he can make a lot more $. I think that's a pretty dumb move. They now have a standard set of $15B and could possibly raise more than that in an IPO. Why wait until people can more accurately project facebooks future, showing it's worth MUCH less?
This kid is going to be loaded for life either way, but I think his best move has to be sell small shares to one or two more strategic partners and then IPO it.
I agree for Microsoft it was as much or more about buying the relationship (and keeping it from Google) as it was purchasing their small share of Facebook.
yeah the valuation was definitely based on the defensive value of pushing out Goog
Just read an interesting article on seekingalpha.
The 240mm investment in facebok pumped up msft's market cap by abot 5 BILLION after the annoncement. If thats not a good deal, I dont know what is...
Yeah there are other factors involved ie earnings today, etc etc, but come on, 240mm for 5billion is as good as it gets.
"The 240mm investment in facebook pumped up msft's market cap by about 5 BILLION"
So MSFT investors seem to think that 100% of facebook is worth $312.5 billion? Not likely...
Unbelievable over priced, but I understand the play from the MSFT stand point. This has to be in some way related to the misplay of Zucker to not sell a while back when he was offered all that money.
Reports have shown facebook's advertising platform to be failing miserably, http://valleywag.com/tech/advertising/facebook-consistently-the-worst-p…
15bn... no chance! Microsoft just wanted a piece of it... they should have bargained for more for the same amount. there is NO WAY that facebook is worth 15bn, and if it is, I'm deactivating my account.
This was a good pr move on Mr. Softy part, nothing more. Apple has developed a cool lifestyle and cult like following around its products, thus reflected in its stock price and gaining market share that have shareholders such as myself grinning from ear to ear. Did you see the lines in the mall on the release of the Leopard software last weekend? When was the last time you seen people that excited about a product from Microsoft? "Halo", They've lost more money on that damn Xbox than they have made.
The investment Mr. Softy made was simply a way to become relevant among Gen Y, Microsoft is dying for the cool factor and age demographic that Facebook have, placing this investment in Facebook was more of a favor to Zuckerberg to give him some sort of an legitimate valuation so they can build off that relationship. With that said, only a nut case would pay $15B for Facebook, they still don't have a proven ad model, they will never catch Myspace with active users, and if and when they file an IPO, I have no doubts that this won't be a hot IPO, but when earnings season rolls around do you really wan't to own a company who PLANS on making their revenue through ads but have not figured out how to do so yet and which was the main concerns of the VC's from Series A funding!
For Facebook to be successful in the long run they are going to have to find a way to make money off the api's and the users who use the widgets
very very good post!
Quaerat labore in omnis velit dolorem omnis. Cum iste neque omnis blanditiis impedit. Iusto rerum rerum minus illum dolorem. Officiis libero consequatur repudiandae dolor est id.
Enim quam hic autem eos. Deserunt qui consequatur et dolorem dolorem beatae culpa. Ea consectetur quo voluptate. Nulla fugit nihil consectetur id non iure. Non voluptate doloremque unde aliquid rerum ut ea.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...