10 Biiiiiiilllllliiiiiooooonnnnnn Dollars

I clicked on Search Engine Land in my feed reader today and nearly crapped in my best pair of GAP jeans. Barry Schwartz posted a piece about Facebook. The title is “Microsoft May Buy $10 Billion Stake In Facebook” and the content is:

Microsoft Is in Talks To Buy Facebook Stake from the Wall Street Journal reports that Microsoft is in talks with Facebook to place a $10 billion stake in the company, giving Microsoft a 5% stake in Facebook.

Everybody I sent that too read it the same way I did: MS is dropping $10B into Facebook. That’s actually not the case. If you read the WSJ piece you’ll find that MS is looking to drop somewhere in the neighborhood of $400M for a 5% stake. The math on that gets you to $10B. C’mon Barry – linkbait is linkbait and I’m totally on board with it but I think you’re completely misleading this time.

My favorite line in the article is:

The company expects this year to have a profit of $30 million on revenue of $150 million, according to people familiar with the matter. Based on that, a $10 billion valuation for the company is sky-high.

Sky-high? SKY-HIGH!! I hereby award the understatement of the year to the WSJ.

I still don’t understand how turning me into a zombie, throwing sheep at me, giving me virtual drinks and allowing me to know when you’re at work, at home, on the bus or picking your nose is worth a potential $10B but maybe I’m just stuck in my ways at the tender age of 34.


  1. Misleading, but technically, it works. 🙂

  2. Count me as another 34 year old who thinks this is nuts. Facebook talk about being a “platform” all it wants, but the fact is that their users are there mostly to waste time. Low purchase intent = low CPMs. Consider that Yahoo has a bucketload of (valuable) search users plus Yahoo Finance and other valueable inventory and is only worth $34Bn.

  3. Dude, having the opportunity to throw sheep at you is priceless.

  4. You actually just stated the value yourself. The laser targeted demographics.

    If I want to only advertise to 18-20 year old bi-curious college students who pick their nose on the bus and have a family in New York but live in Boston, I can with facebook. I have the ULTIMATE demographic targeting engine.

    Not even Google can do that.

  5. Why does it have to be sheep?

  6. Hey, where do I sign up to throw sheep at you? 🙂

    Good to see you posting again. 🙂

  7. Throwing sheep or not, $10B for something turning $150M in revenue is insane. Isn’t valuation typically at 3 – 7x annual revenue, and 1.5x in some industries? Where can someone say a company is worth 66x their annual revenue with a straight face and not be dubbed totally insane? This Math 2.0 stuff has me confused as well.