Microsoft has paid $240m (£117m) for a 1.6% stake in Facebook that values the hugely popular social networking site at $15bn (£7.3bn).
That seems like an awful lot of money. Actually, that IS an awful lot of money. Is such a small stake worth it? My opinion is a resounding YES. Not because of what Facebook is but because of what the investment represents:
Facebook is THE hot property for Western social networking right now. An investment by Microsoft shows they are in touch and progressive.
A large sum for such a small stake increases the ‘halo’ effect of Facebook and keeps everyone believing this is the ‘Second Coming’ – which increases the value of Facebook and in turn Microsoft.
Unlike YouTube, Facebook has something that is EXTREMELY valuable – raw personal data (by the boat load!). We are in the Information Age and Facebook ‘owns’ information on millions of consumers.
Most importantly of all… Google wanted to buy the stake first. Microsoft have struck a massive PR blow by beating Google. It helps establish Microsoft as the number 1 player in town, it hints at Google not being the best parent in town – as they have been turned down by Solicon Valleys darling Zuckerberg. For all the PR inches this story has delivered it is probably on par with a media spend of $100m, and the remaining $140m are chump change to a company like Microsoft – I mean they are writing off $1bn on broken Xbox360s!
Some interesting related facts:
Microsoft will also sell internet ads for Facebook outside the United States as part of the deal that took several weeks of negotiating.
Microsoft already provides banner advertising and links on the US site.
Mark Zuckerberg started the online social networking site in his Harvard University dorm room less than four years ago.
Mr Zuckerberg, 23, has indicated he would like to hold off on an initial public offering for at least two more years.
He rebuffed a $1bn takeover offer from Yahoo last year.
Facebook has a current audience of nearly 50 million active users.
Google and Microsoft have crossed horns before for hot Internet properties.
Google beat Microsoft with a $1.65bn acquisition of online video sharing site YouTube last year.
Facebook expects to make a profit of $30m this year so on conventional valuations a $15bn price tag would look expensive.
ALTERNATIVELY, this entire post was just an excuse to show an image of the young Bill Gates provacatively schmoozing over his monitor 
Tags Bill Gates Facebook Microsoft