Feeds

Microsoft pays $240m for tiny sliver of Facebook

Google shall not pass

Top 5 reasons to deploy VMware with Tegile

It was the worst-kept secret in the internet industry, but today Microsoft proved all the rumor-mongers right by confirming that it is taking a stake in Facebook, and shutting Google out of the social networking website.

Microsoft is shelling out $240m for a 1.6 per cent stake, helping the Facebook reach a $15bn valuation in its current fund-raising company. This is a somewhat surreal price for a company that will have revenues this year of maybe $150m, according to analyst estimates.

And just think, a few short weeks ago, Microsoft CEO Steve Ballmer was comparing Facebook with GeoCities, in an interview with The Times. If he was trying to talk down the price, he failed.

Microsoft might one day be able to flip its stake at a profit - but that looks like a long term coming. The deal makes more sense if it is seen as Microsoft paying to play: for the cash, it gets to beat rival suitor Google for exclusive global third-party rights to sell advertising on Facebook.

Microsoft had previously landed a deal to sell US banner advertising on Facebook in August 2006. Today's announcement expands the pact internationally — with approximately 60 per cent of the site's nearly 50 million users registered outside the US.

"The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership," Kevin Johnson, president of Platforms & Services at Microsoft said.

Under the deal, Microsoft will sell banner ads, with both companies splitting the revenue.

Palo Alto-based Facebook said the investment will allow it to further expand overseas and develop an advertising system tailored to its users. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.