Web 2.0: Microsoft buys stake in Facebook

img moneyThose who thought that the times of the “tulip trades” in the IT / Web industries are over could today learn an even new record in company valuation.

Microsoft bought a 1.6 percent stake in Facebook for USD240 million. This would value the three-year-old company at about USD 15 billion. While Facebook is expecting annual revenues of about $150 million this year, most likely the very high price is also related to a competition between rivals Google and Microsoft to buy a stake in the company.

The New York Times reports:
… The astronomical valuation for Facebook is evidence that Microsoft executives believed they could not afford to lose out on the deal. Google appears to be building a dominant position in the race to serve advertisements online. Fearing it might lose control over the next generation of computer users, Microsoft has been trying to match and in some cases block Google’s plans, even if that effort is costly.

“We are now stepping outside what is typically a business decision,” said Rob Enderle, the founder of the strategy concern Enderle Group. “This was almost personal. I wouldn’t want to be the executive that’s on the losing side at either firm…”

RIM today also announced that they will provide a client application on their popular Blackberry PIMs that will allow native access to the Facebook social network services.

The deal puts the 20% share of Mark Zuckerberg, the 23-year-young Facebook founder who dropped out of Harvard to focus on Facebook, at USD3 billion. Hope he does not believe now that “…it never rains in Southern California…

via: New York Times

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