News Microsoft invests £117m in Facebook

Still, MS are a company, they didn't become so rich by throwing money around willy nilly. They may have made some bad investments, but they won't buy something "because they can", if it doesn't advantage the company in some way.

 

they only bought 16% of the company

 

out by a bit there - 1.6%, hence the obscene valuation of $15bn

 

Am I the only one that doesn't give a crap about this whole social networking fad? I'm the only person my age that I know that doesn't have a myspace.

 

Um, Facebook does hold a $15bn valuation now dude.

 

Based on the profits the site generates this is a huge over-valuation, even if it is really valued at this number. It's artificially inflated due to MS's high price of the 1.6% share because they weren't investing in the site purely for it's profit margins.

 

Well duuuuh. Microsoft one the deal with Facebook thanks to the massive valuation. That point was originally in the article, I guess it was snipped by the editing gods.

 

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I'll be interested in seeing the type of advertising that they do. If they used images/flash files then they will be blocked by adblocking plugins in browsers. It would be better for them if they went for more subtle, text-based ads.

 

Thanks for that educated and sarcastic comment. I happen to have a grasp of basic arithmetic and am more than able to calculate that $240m/0.016 = $15bn. However, it's a gross oversimplification to extrapolate from that that Facebook is actually WORTH $15bn. Even in fantasy dot-com land you don't get a $15bn valuation off the back of $150m of earnings. Period. If Facebook floated on a stockmarket tomorrow, it wouldn't raise $15bn (well, it wouldn't raise anything because tomorrow's Saturday and the markets are closed, but you get the point). The value of Microsoft's investment lies not in the fundamental value of the shares but in the rights Microsoft has presumably gained as regards exclusivity to serve Facebook's banner ads.