Facebook Values Itself at $3.7 Billion (Or Less)

When Microsoft bought a 1.6 percent stake in Facebook back in October 2007, it paid 240 million dollars for the preferred stock, which meant that the company was valued at roughly 15 billion dollars. A big discussion broke out over whether Facebook was really worth that much, or 15 billion was an unrealistic number.

It turns out that it was, since Facebook values itself at somewhere around 3.7 billion dollars. We know this, because the Associated Press was able to retrieve some details from the transcript of a June court hearing held over a legal settlement between Facebook and ConnectU.

How the AP did that is interesting in itself; they copied and pasted the blacked-out portions of the document into another document. I’d be surprised, but here at Mashable we were also once able to retrieve information in a similar way, due to a sloppy conversion of a Joost-related Powerpoint presentation to a PDF document. It’s hard to believe that things like this happen in multi-million dollar deals, but they obviously do.

The most interesting bit of information that AP was able to retrieve is Facebook’s own assessment of its worth: $8.88 per share, which gives the company a market value of around $3.7 billion.

This puts Facebook into a very uncomfortable situation for several reasons. First, it’s never good when the value of your company is suddenly perceived as being 4-5 times less than before. Secondly, although preferred stock may (but that’s debatable and depends on the nature of the stock) be worth more than common stock, I doubt that Microsoft is happy to realize they’ve severely overpaid their share in Facebook. And thirdly, the fact that the economic situation has been steadily worsening after June 2008 doesn’t help matters at all, and one can argue that Facebook is probably worth far less – by their own standards – than the aforementioned 3.7 billion. That’s the danger of being overvalued and overhyped; if presented with evidence to the contrary, you might soon find yourself sinking far lower than you realistically should.

Courtesy: Mashable.com

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Microsoft Attempts Another Low-Cost PC Solution for India

AMD and Microsoft, two great tastes that taste great together, are teaming up to sell a new PC, the IQ, in Bangalore and Pune, India for about $513.

The PCs run Windows Vista Basic — no flying windows for you, kids — and Works along with some test prep and English learning programs as well as an MSN IQ Education Channel. The PCs will be distributed by Zenith Computers.

Courtesy: techcrunch.com

Yahoo’s bid to buy Facebook

According to the Wall Street Journal, Yahoo has offered Facebook an amount that could be approximately $1 billion in a bid to purchase it. Facebook is second largest social networking website in the US. Yahoo has been talking to Facebook over the past year.  Facebook also had discussions with Microsoft and Viacom. Earlier as well there were rumors of its acquisition wherein Facebook reportedly turned down an offer of $750 million, deciding to hold out for $2 billion.

Currently Yahoo has social media websites (Flickr, del.icio.us & Yahoo Answers) however they do not have anything like Myspace; the largest social media website or Facebook. Lets wait and watch that weather we’ll see Facebook as a Yahoo company or not.

Facebook Ads, Powered by Microsoft

Hot on the heels of the MySpace-Google deal comes news from the NY Times that Facebook (Facebook) have inked a three year agreement with Microsoft, making adCenter the exclusive provider of banner ads and sponsored links on the site. The deal is quite clearly a reaction to the MySpace (MySpace) ad deal, since the serious talks only began last week. No financial details are being given, which prevents a comparison to Google’s (Google) $900 million, but Steve Berkowitz of Microsoft has said the move is “not comparable to the MySpace deal because we focused on the right economics for both parties”. Uh-huh.

Founded in 2004, Facebook is the second biggest social network in the US – it has 9 million users compared to MySpace’s 100 million or so. The network already runs promotions with Apple (see iTunes on Facebook) and has struck other promotional deals like the recent Facebook credit cards, where companies form sponsored groups on the site. The Microsoft ads will go live this fall.

Courtesy: Mashable.com

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