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Microsoft's Facebook Deal Might Make Sense If It's An Ad Subsidy... But What About The Hedge Funds?
from the still-scratching-my-head dept
We had some good comments on yesterday's post trying to do the math on Microsoft's $240 million investment in Facebook, for just 1.6% of the company. A few people pointed out that if you ignore the ownership part, and just think of it as something of a marketing statement for Microsoft's ad network, then perhaps it could make some sense. Maybe. Since the deal does come with a big advertising deal, if Microsoft thinks of the $240 million as a marketing spend or ad subsidy with the chance of eventually having some payback then it could potentially make sense -- depending on how valuable Facebook ads turn out to be, and whether or not it then helps Microsoft sign up additional ad partners. However, what's a lot more difficult to figure out is the corresponding rumor that on top of the $240 million from Microsoft, two hedge funds combined to dump another $500 million into Facebook at the same valuation. It's been reported that Facebook had been looking for $750 million, but those hedge funds don't get any of those additional benefits that Microsoft gets. For them, the best has to be on the fact that Facebook is going to be worth a lot more than $15 billion at some point in the relatively near future. That seems like an awful lot of money to bet on a risky situation without that much upside.
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Reader Comments (rss)
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microsoft is getting desparate
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Somethings up
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Re: Somethings up
That's what people said about eBay buying Skype, and we all know how that worked out.
It's also what people said about AOL buying Time Warner.
There may be a plan, but it if you do a little math, it's not hard to see that there are very few options here and they're all betting on a very risky scenario.
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agreed
BTW, a typo: "the best has to be" = "the bet has to be"
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Microsoft's Facebook Deal
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MS / FB joined hands
NICE!!!
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