Microsoft takes $324m Facebook stake
Microsoft and Facebook said the $US240 million investment valued Facebook
at $US15 billion, which analysts said was a steep price and a bet
the young company would be able to transform itself into a hub for
all sorts of Web activity.
“The only way this works is if Facebook becomes sort of the users’
operating system on the Internet %26#150; everyone logs into Facebook every
day to get in contact with their friends and use a multitude of future
applications that will be developed for it,” said Morningstar analyst
Toan Tran.
Facebook, a social network that lets friends and colleagues share information
among themselves, already has allowed developers to create games and
other applications specifically for its site, whose popularity makes
it extremely valuable to advertising sellers such as Microsoft and
Some 250,000 new users register on Facebook each day, Microsoft and
Facebook said.
Microsoft said it would be the exclusive third-party advertising platform
for Facebook, which has more than 49 million Internet users. That
extends a previous deal into Facebook sites outside the United States.
Google and Microsoft, now rivals for Internet-based audiences and applications,
each expressed interest in a minority stake in Facebook for its growing
user base and advertising potential.
The rivals have butted heads before for Internet properties. Google
beat Microsoft with a $US1.65 billion acquisition of online video
sharing site YouTube last year.
Forrester Research analyst Charlene Li said that Microsoft was a better
strategic fit for Facebook, since it knew how to work with software
developers and build computing environments %26#150; such as its Windows
operating system.
“Microsoft is a company that knows how to build platforms, knows how
to develop relationships with developers.
Microsoft developed the
network that is the biggest, most vibrant one out there,” she said.
“Frankly, Google didn’t bring as much to the deal.”
Google Co-founder Sergey Brin told a meeting with Wall Street analysts
at the company’s Silicon Valley headquarters that his company could
partner with important Web sites.
“We don’t feel, at a higher level, that we need to own every successful
company on the Internet,” he said.
Shares of Microsoft rose slightly to $US31.47 from a Nasdaq close of
$US31.25, while Google ticked down to $US675 from a close of $US675.82.
