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Three Reasons Microsoft Paid So 'Little' For Facebook
Posted by
Zonk
on Thu Oct 25, 2007 01:33 PM
from the i-guess-it's-all-relative dept.
from the i-guess-it's-all-relative dept.
An anonymous reader writes "Microsoft's $240 million investment is much smaller than the rumored $750 million that Facebook sought. Why the difference? Wired Epicenter's Terrence Russell analyzes the deal, and points out three good reasons why Microsoft got a 'bargain'. 'Microsoft Only Needs an Entrenched Position - Ballmer's plan to acquire 100 startups in 5 years is still sketchy, but we got the point -- Microsoft wants momentum. If the company is to go forward as planned then taking a small, strategic piece of Facebook makes sense. Microsoft's financial interests in Facebook's ad platform already exist, so it only makes sense to strengthen that tie as the hype builds.'"
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Smart Move? Maybe... (Score:5, Interesting)
If people say "Facebook's the flavor of the month and it's never going to warrant a $15 billion value because the next flavor of the month will come along and steal its thunder," then Microsoft wins because Facebook can never find other investors at that valuation. That creates a cascade effect of investor avoidance, forcing Facebook's actual value down to where it's reasonable and Microsoft can snatch it up at a bargain.
If, on the other hand, people drink the Kool Aid and start pumping up the price of Facebook, Microsoft can sell out its interest at a profit.
I'm thinking the answer is the first possibility... they put Facebook's value at $15 billion to discourage others from investing in Facebook and make Facebook beholden to them.
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Y/N/M?
Facebook == Shot at Adobe's Flash (Score:5, Insightful)
Re:Facebook == Shot at Adobe's Flash (Score:5, Interesting)
Well
Re:Facebook == Shot at Adobe's Flash (Score:5, Interesting)
That makes no sense. There are five things stopping Google from just throwing out a better Office.
This is even less likely to be true than what you said about Google and Office. How is having access to an open version of Flash going to kill the Windows platform? Because you are talking about Flash, that implies that you are talking about web development. The Windows Platform is an operating system. Therefore you are attempting to make the claim that open Flash will allow a third party company (which, by the way, will almost certainly have less manpower and money than Microsoft) to develop some sort of web OS that will render a mature, entrenched desktop OS like Windows obsolete. Actually, lets leave out the mature and entrenched parts of the argument for a moment (although they alone are enough to kil
Re:Smart Move? Maybe... (Score:5, Funny)
Balmer: $750 million dollars?? ****Agrrrrahhahahhahahah***** (throws chair)
Facebook: Ok $240 million could do nicely as well.
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Re:Smart Move? Maybe... (Score:4, Insightful)
Buy low... (Score:2)
Simple really.
Re:Buy low... (Score:5, Funny)
$240,000,000 and you folks say that's a bargain? If I had $240,000,000 I sure wouldn't blow it on a website! I'd blow it on fast cars and expensive booze and hookers. Hell, I'd stick it in the bank at 5% interest and blow the $12,000,000 interest on fast cars and expensive booze and hookers every single year and leave the whole $240,000,000 to my kids. Come to think of it, if I had that kind of money I wouldn't NEED hookers!
I might even buy an iPhone, too.
-mcgrew
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-Bateman
p.s. At least I got a reserva
Title is misleading (Score:5, Informative)
Re:Title is misleading (Score:4, Informative)
Plans... (Score:4, Interesting)
What kind of a plan is that? No wonder Microsoft is losing its way.
Compare and contrast with the business plan of Steve Jobs, which I think can be summed up as "make great products"...
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Re:Plans... (Score:4, Informative)
Since when? I was always under the impression it was "sell over priced gadgets to trend whores", or "hire a great marketing dept".
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Profits are good, don't get me wrong, but what investors want is growth. Over the last year AAPL has been a very good investment. MSFT, not so much.
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Yes, the past few years have not been that good to be an investor in Microsoft stock, but for the long term investor Apple has a long wa
Re:Plans... (Score:4, Informative)
But over the last five years, Apple stock has been +2270%, vs Microsoft +21%.
An in the last ten years, Apple stock has been +4314%, vs Microsoft +89%.
What "long term investors" would prefer to have been sitting on MSFT?
Microsoft has 80,000 employees, +95% market share, and competes in businesses outside of Apple, which only has 18,000 employees and ~3% worldwide market share. However, Apple is bringing in more than a third of Microsoft's revenues and making more than a quarter of Microsoft's profits, and is selling new Macs--which eat up direct sales of Windows PCs--four times faster than the industry.
So Apple is doing good.
Microsoft exploded in the 90s, reached supernova in 2000, and has been flat as a pancake ever since. Apple exploded in the early 80s and ran into problems in the mid 90s, but recovered during the dotcom years and has been among few tech companies to wildly outperform its 2000-era peak. Microsoft certainly hasn't.
Apple doesn't have any catching up to do; it was already a high flying major company when Microsoft went public in 1986. Seriously, what "long term investors" have been holding Microsoft stock since 1986 apart from Bill Gates?
What has Microsoft done for you lately?
How Microsoft Got Its Office Monopoly [roughlydrafted.com]
What You Expected, What You Got: Windows Vista Vs Mac OS X Leopard [roughlydrafted.com]
240 mil is not a serious ownership (Score:2)
Microsoft (Score:5, Funny)
Microsoft corollary: Unless it's Microsoft then never ascribed to incompetence or bad management what can adequately explained by pure unrelenting evil.
Re:Microsoft (Score:5, Insightful)
The man on the street says.... (Score:5, Funny)
Man #2 - Redacted, turned out to actually be a woman
Man #3 - Wasn't this the MS business plan since way back in the early 90s? This is news?
Man #4 - (claiming to be spouse of man #2) Is there really 100 startups worth buying? I thought the venture capitalists were becoming a bit put off on the whole tech thing?
Man #5 - (throws a chair) MS will buy 100 startups if they have to secretly pay those companies to start up... MS will kill the competition in the buying startups sector!!
Man #6 - Will they support iTunes?
Man #7 - (dubiously wearing a
Man #8 - Shouts "Sorry, have to run and go start a company......"
Seriously, 100 startups? Why not 49? Why not 'as many as it takes'... what is the deal with 100? Microsoft begins with an M, why not 1000 startups?
Math issues?? (Score:2)
But, that's exactly what they did do. They paid $250Million for a 1.6% stake in the company. That means it values the whole comp
What does 1.6% get MS? (Score:2)
To me 1.6% does not signify any 'controlling' percentage, maybe gadfly status...
MS want to buy 100 startups? (Score:2)
Microsoft's 'Innovation' at work (Score:3, Insightful)
I think a perfect settlement would have been for Microsoft to continue business as normal and innovate all they want, the only restriction being that they not be allowed to buy any more companies. If they are this magnificent well of innovation and ideas, go ahead, show us. 8 years later, with effectively no penalties actually imposed on this company, the best they come up with is a plan to buy 100 web companies in the next 5 years.
What innovations have we had from Microsoft in the last 8 years?
Prior to that we have web based email (HotMail), web browsers,
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That's a funny take on the sale... (Score:3, Interesting)
Surely ... (Score:3, Funny)
I wish Facebook and MySpace would join..... (Score:3, Funny)
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Re:Facebook has already "jumped the shark" (Score:5, Insightful)
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From a
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That's right, blame the users.
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Social networking
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Re:facebook my ass (Score:5, Funny)
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Re:facebook my ass (Score:5, Insightful)
Why is any of that desirable? Honestly. I graduated from high-school in 1993, and I have a current e-mail address and phone number for the dozen-or-so people who still matter to me from those days. When we move, change contact information, or whatever, we send our little group a quick notification, and life moves on. Why on Earth would I want to be contacted out of the blue fifteen years later by someone who probably hasn't crossed my mind since graduation night (or insert whatever non-school equivalent event suits your purpose)?
An example: my sister is a member. Perhaps six months ago, one of my first real girlfriends from the ninth grade in 1989 sent her a message asking how to find me on Facebook, so that we could catch up. Catch up with what? We haven't spoken in *at least* ten years, and she's apparently churned out a few kids in her mining-town trailer park about a thousand miles from here. We're total strangers by this point with utterly nothing in common, and yet people find it scintillating to imagine this kind of scenario through the magic of Facebook? "So, how have the last ten years of your life been? Oh, fifty pounds you've put on... isn't that something? Four kids? Fantastic." Is that what they call a "reconnection?" No thanks.
Maybe I'm just not much of a sentimental, but if a friendship hasn't stood the tests of time organically, why should I suddenly be excited to drag the corpse up out of its well-deserved grave with Facebook? Some of my closest friends live hundreds of miles away, yet we stay close because of things in common and, you know, other friendship qualities. The most important of these is a willingness to put a little, tiny bit of work into actually being a friend. Maybe that means visiting every couple years, or maybe it's even something as small as keeping my phone number and e-mail information written down somewhere and using either or both from time to time. I do those things for them. Relationships that don't have those qualities are about the last things I want to pursue, and Facebook seems to make it way too easy to be a "friend" without being a friend.
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There was no post-seconda
Re:facebook my ass (Score:5, Insightful)
As for Facebook, if you join it, to socialize with your friends, it's completely different. Make an account, find people you actually know on it, add them as friends and login maybe once a week or so. Suddenly your actually able to keep up to date on those 10-15 people without having to call them weekly to find out whats going on. Sure some people freak out about this vast amount of stuff I can find out that your doing, but I only know about it because you posted it on there for the world to see.
I rarely join the groups on facebook, and when I do, I do so with a grain of salt realizing a digital group like that that is rather pointless in the first place. However the ability to add a study group or other real life type groups and post discussions, share meeting times and plans, as well as see everyones class schedule on there. That's what makes facebook useful.
This is why we need to stop putting myspace and facebook into the same group. They really aren't as similar as people keep saying they are. Facebook is for people already with friends that want to keep in touch easier, MySpace is a network for meeting new people and getting new connections.
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