One of the most successful social network sites on the planet (5th Largest I believe) sold a small slice of itself to Microsoft for $240,000,000. Earlier CEO , 23 yr old Mark Zukerberg spurned a take over bid by Yahoo for $1,000,000,000. That is 1 cool billion. With Microsoft coming to the plate for a 1.6% share, it allows for Facebook to complete its ambitious expansion plans and maintain ownership. Facebook CEO Zukenberg will consider a public offering in a couple years , no doubt believing that the company will be worth no less than 10 times what Yahoo tried to snag it for.
The Facebook site with it 47 million users has really been sort of an experiment in that it no longer limits it attraction to college kids but opened itself up to anyone that was interested. There is currently no commonality in the specific traits of its users and it allows anyone to jump in, in a sort of free for all, at least as far as directing it towards one group or another.
Facebook will likely experience some real growing pains and to be sure aligning itself with Microsoft will provide some needed liquidity and actually is a stroke of genius. Not that the site itself isnt already.
To get specific here, Microsoft bought a 1.6 % stake in Facebook and Google who lost out in its bid must not have seen the same potential value as Microsoft who needs to increase its online advertising. Microsoft will sell ads that will appear when Facebook users (over 47 millions users to be exact ) uses the Windows On Line service, Microsoft Smart Phones and even the X-box online gaming site.
Microsoft in seeking to increase that ad revenue with its new base on Facebook, currently reporting about 1.8 billion a year in on-line ad revenue. Google by contrast is in the range of 13.3 Billion in ad funds revenue. But $ 240 million output from Microsoft is just seed money for the, if and when, they may be able to get a bigger share. They probably feel pretty good in beating out Google, the clear online revenue generating machine title holder.
Dont we all just love Capitalism!