Centerfield

MS' Facebook Deal Probably Done To Keep Goog Out

OK, well, also, MS blogs suggest a thing for Facebook, no doubt because it's the hot young thing on the block.

But the cold, hard, business reality has gotta be keeping Google from getting their toes in the door.

Why do I think that? Well, because (1) this a lotta money for a tiny amount of a company - at an amount that values the company at 100x revenue. But, now, for Google or anybody else to buy the company or even get a substantial share of the company, they also hafta pay out the nose, because companies are very reluctant to value their stock downwards.

The other reason is that that's ALL MS is getting, other than big shareholder representation. It's not a buy, and no board seats seem to be involved. It's probably all they COULD get; pre-deal Facebook statements have been very distrustful of MS. But for MS, that alone is probably a good deal for that money. They're living in fear of Goog, especially after their spectacular search engine failures.

This could create some problems finding investors for Facebook in future willing to go in at that nosebleed rate. Or not, since there's gotta be at least one investor as stupid as the linked analyst, who believes MS will double their money (snicker). For that matter, there WERE investors willing to believe in Akamai, which was just as nosebleed, and lost stunning amounts of money (I'm just bitter about Akamai because I never did get around to selling it short before the crash, even though I knew the reality).