Daily Archives: October 24, 2007

Microsoft loves Facebook

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Microsoft bought a 1.6% stake in Facebook today for $240,000,000.   Reported at NYT here.  This give a market value to Facebook of right about 15,000,000,000.   

WoW

I do think Microsoft is smart (and Facebook stupid) to make the cash outlay much smaller than most had thought, giving them an alliance and a powerful foothold without spending the “billions” that apparently would have been required to buy a big stake in the internet’s latest wonder site.

With *revenues* of about 150 million Facebook is now valued at …. wait for this ….. one hundred times revenues.    This is simply a spectacular and speculative valuation, even by internet standards where  even a Google is only valued at about fifty times earnings.   Note that if Google was valued at 100x their expected revenues over the next year their capitalization would be something in the neighborhood of 1.5 trillion dollars.    

Many will suggest that the value in keeping Facebook away from Google was so great that MS has won big, but I’d predict not much will come of this alliance.     Like many online regulars I’m already tiring of Facebook and looking for a completely open, portable social application.   To justify today’s value Facebook will need to grow pretty much like nobody’s ever grown before.    Sure, it’s possible, but I think this will go down with Google’s YouTube aquisition as good money after bad, because monetizing Facebook traffic will be far more problematic than Microsoft seems to think.

All that said, congratulations to the Facebook team who must be popping a few corks about now…. no champagne is good enough for this news.

Science on a Sphere

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Wow, NOAA has a great educational tool – a large spherical display representing earth, using computers and projectors to animate the display.  It is called Science on a Sphere.

Here’s a list of locations that have this.

It looks like a schools could build one of these for themselves, though I’m not clear any have done it and not clear on copyright issues – they say this is not an open source project.   It appears the cost would be in the neighborhood of 5-10,000 for the hardware consisting of 4 projectors and 5? computers, but I think the main challenge for schools would be the room.   Many schools don’t have a “spare room” they could easily dedicate to this project and it appears it’s complicated enough that it would be difficult to put up and take down for each lesson.

But what a great concept!   A few years ago we visited the Delorme world HQ back east and they had a  scale model of earth that was 3 stories high and rotated.   But the NOAA Science on a Sphere is better because you could project data and topography and vary the lessons.

Of course as a cheap alternative teachers should (MUST!) get “Google Earth” to all the students they have.    Google earth is arguably the best cheap visualization tool ever to hit geography and if you have not seen it get it now – it’s free and fantastic.   

Google v Microsoft over Facebook

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Henry Blodget over at Silicon Alley Insider has a thoughtful post today predicting that Google will beat out Microsoft in the Facebook sweepstakes, and that the real winner here is Facebook founder Zuckerberg who will walk away from any deal with a jaw dropping, market driven valuation of Facebook.     Blodget notes that even if Microsoft spends enough to win the Facebook bidding war Google wins again because Facebook will simply milk Microsoft’s cash cow leaving them with little in the way of a superior online MS environment.

I think this last point is particularly relevant, and poses one of the key threats to Microsoft’s long term viability.    Unlike Google and even Yahoo, new companies don’t appear to see a Microsoft aquisition as much more than a big payday.   It’s not clear to me that Google does any more for the companies it aquires than Microsoft does, but I do think the perception is that Google will inject innovation and enthusiasm where Microsoft will just absorb you into their failing online collective.    I don’t think these assumptions are, on balance, valid, but I think they are part of the equation when new companies and their generally young, inexperienced founders are courted by the big players.