Late last year, takeover talks between Yahoo and Facebook fell apart after the social-networking site
rejected Yahoo's $1 billion offer. Yahoo was reportedly prepared to offer up to $1.62 billion, but a Wall Street analyst says that valuation was based on far too conservative estimates, and that Yahoo's failure to seal the Facebook deal
could be on par with its infamous decision to not buy Google when it had the chance. His analysis is based on Facebook's high levels of traffic and the demographics of its users, and based on that he says "Facebook is no doubt one of the most important Internet companies to have been created in the last five years." He apparently avoids mentioning how much he thinks the site is worth, but numbers from $3.2 billion to the
previously mentioned $8 billion get tossed around. Noticeably absent, however, is any mention of the revenues Facebook is generating. Like fellow social-networking site MySpace, Facebook has plenty of traffic, but it's really not clear
how successfully the sites can monetize it, even when they're under the arm of a bigger corporate parent. What's even less clear is if these sites will have any more staying power than previous social-networking stalwarts, which have turned out to be little more than fads over the longer term. While Yahoo's shareholders probably do regret it passing on buying Google, it's pretty doubtful all that many of them would regret the company not dropping a few billion dollars on Facebook.