Feeds

Facebook price tag drops (another) $3.5bn

Russians eat more stock

Bridging the IT gap between rising business demands and ageing tools

Facebook's Russian sugar daddy has offered to buy back employee shares for $14.77 a pop, which means the ostensible value of the social networking site has dropped another $3.5bn.

In late May, Digital Sky Technologies paid $200m for a 1.96 per cent share of the Palo Alto-based startup. That put the company's value at $10bn, down from the onanistic $15bn valuation Microsoft spewed onto Silicon Valley in the fall of 2007. As part of its deal, DST said it would also buy back stock from Marc Zuckerberg's minions, and as first reported by The New York Times, the Russian investment firm has now made this tender offer official.

DST will purchase up to $100m in common stock from Facebook employees at $14.77 a share. That puts the company's valuation at $6.5bn. But if you like, you can argue that the $3.5 value drop isn't actually a value drop. The DST and Microsoft deals were for preferred stock, not common.

Regardless, $6.5bn seems awfully high for an outfit that's still struggling to actually make some money. Yes, the site welcomes over 300 million visitors a month, but serving up all that digital solipsism costs some serious coin, and it's unclear how much the company is pulling in from ad revenues.

According to a recent analysis from Data Center Knowledge, Facebook is spending somewhere between $20m and $25m a year on data center space. And this past November, unnamed sources told TechCrunch that the company was spending "well over" a million a month on electricity and "likely" another $500,000 for bandwidth. That's what happens when self-obsessed Web 2.0 types start uploading an endless stream of photos.

Zuckerberg recently said the company's revenue is growing 70 per cent a year. But that could mean anything. And as its user base continue expand, it's costs are growing as well. Zuckerberg says the company will be "cash flow positive" next year. But that's pretty much what you'd expect him to say.

You also expect that DST will spend the entire $100m, which would give the Russian investment firm a 3.5 per cent stake in Zuckerberg's outfit. And this, Zuckerberg says, is prove that Facebook is changing the planet. "This is recognition of Facebook’s growth and progress towards making the world more open and connected," reads his canned statement. He also said that Facebook is not expected to go public anytime soon. ®

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.