Switched has a new home! Huffpost Tech.

Click here to visit the new home of Switched!

Hot on HuffPost Tech:

See More Stories
AOL Tech

Microsoft Buys a Tiny Chunk of Facebook

by Tim Stevens on October 25, 2007 at 08:19 AM

Microsoft Makes $240 Million Committment to FacebookLast month we reported the speculation that Microsoft was planning to make a half-billion dollar investment in Facebook for a measly five percent stake in the company. That investment would have effectively given the company a value of $10 billion.

However, it seems that rumor was a little off, as the real terms of the purchase were made public last night. Microsoft's investment is actually about half what was rumored, "just" $240 million, but for that it is only getting 1.6% of the MySpace alternative. This gives Facebook a total valuation of roughly fifteen billion dollars.

MySpace's Tom Anderson and Chris DeWolfe, who sold MySpace to News Corporation for a relatively paltry-looking $580 million last year, might just be wishing they'd stayed independent a little bit longer.

Some, like Wired's Epicenter blog, think that Microsoft actually underpaid, and that Facebook may have been asking too much. Rumor has it that Google and Microsoft were both very interested in making the purchase, but their offers were mutually exclusive. Wired's Terrence Russell speculates that Google balked at the amount Facebook was asking, leaving Microsoft as the only interested party in what he says "could be the next Skype," referring to eBay's recent complaints about overpayment for the under-performing online calling company.

Meanwhile, Peter Cohan over at BloggingStocks wonders why Microsoft is paying so much for a company that makes so little revenue. The answer, of course, is potential, and Cohan concludes by saying "I'd be willing to bet that Microsoft's 1.6% stake will more than double today's $240 million when Facebook goes public."

So, it seems even the financial bloggers of the world are hedging their bets in their posts. We're not really in the financial prediction business, so we'll stay out of that debate. What we will say, though, is that Facebookers can expect a lot of ads for Windows Vista in their future!

From AOL Money, Epicenter, and BloggingStocks

Related Links:

Tags: Facebook, Google, Microsoft, MySpace

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

HuffPost AOL Social News Most Popular