mohit | Shared With: Everyone - Apr 28 2008 | facebook, valuation, startups, web 2.0, blodget
This list of valuations seems more reasonable than others I have seen.
Quoted: Putting a value on private companies is hard enough for insiders and venture capitalists who have full access to the company's financial statements. ...
- mohit | Shared With: Everyone - Apr 29 2008 | facebook, microsoft, valuation
One of the reasons for why Microsoft's $240M investment for 1.6 percent of Facebook does *not* necessarily imply that Facebook is worth $15B. Microsoft very likely got some "preferred" treatment in this deal.
Quoted: Microsoft is probably getting some kind of option for their $240 million…. We don't know what it is, but it's probably the right to purchase shares of Facebook at some known price in the future. The value of that option is very hard for business journalists to calculate, but it's NOT hard for Microsoft's CFO to calculate, and it's probably very significant. You have to deduct the value of the option from the purchase price before you can multiply and get the valuation. Almost certainly, the $15 billion valuation is ridiculous.
The other reason (curiously omitted) is that Microsoft received exclusive rights to international advertising on Facebook. This also has to be deducted from the purchase price.
ShareViewed: 1 Time - mohit | Shared With: Everyone - Dec 08 2007 | facebook, microsoft, ballmer, valuation, social networking
Quoted: Ballmer continued to dance around the matter: "Will Facebook be worth $5 billion, $15 billion or $50 billion some years down the line is really up to their team and how they take it forward." Maybe it's just us, but Ballmer makes Microsoft sound less like a partner and more like a spectator.
ShareViewed: 3 Times
- eric - Apr 28 2008
- kabir - Apr 29 2008
- eric - Apr 29 2008
- kabir - Apr 29 2008
- mike - Apr 29 2008
- mohit - Apr 29 2008
- eric - Apr 29 2008
You must be Mohit's friend before you can comment on this Fave.Wow. Do you remember when they turned down a valuation of $2 billion and I said they were insane? Guess they turned out right after all...
doesnt mean shit until the money's in the bank :)
It does when they're taking money in the bank along the way at a $20 billion valuation! Ahem, Microsoft!
haha, touche' my friend!
The $15B valuation was bogus in the original analysis as well. Microsoft made a payment of $240M to Facebook. PART of what they received was a 1.6% stake in the company. But that was not all they received. They also got EXCLUSIVE rights to all international advertising revenue on the site. To back-calculate a valuation, you have to subtract the value of that right from their payment.
I don't know why nobody in the press writes about that. Probably because most people in the press don't want to use their brains and they just write whatever anybody else is writing.
in addition, i don't think it has been disclosed whether microsoft received common or preferred shares. if it was preferred, you also have to subtract the value of any preferred privileges from microsoft's payment.
@mike and @mo: Good points and includes some info I did not consider. What I think nobody would argue against at this point, however, is that Facebook made a good decision NOT to sell out for $2 billion.
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