Analyst Says Yahoo Not Buying Facebook Is Akin To It Passing On Google

from the reality-check dept

Late last year, takeover talks between Yahoo and Facebook fell apart after the social-networking site rejected Yahoo’s $1 billion offer. Yahoo was reportedly prepared to offer up to $1.62 billion, but a Wall Street analyst says that valuation was based on far too conservative estimates, and that Yahoo’s failure to seal the Facebook deal could be on par with its infamous decision to not buy Google when it had the chance. His analysis is based on Facebook’s high levels of traffic and the demographics of its users, and based on that he says “Facebook is no doubt one of the most important Internet companies to have been created in the last five years.” He apparently avoids mentioning how much he thinks the site is worth, but numbers from $3.2 billion to the previously mentioned $8 billion get tossed around. Noticeably absent, however, is any mention of the revenues Facebook is generating. Like fellow social-networking site MySpace, Facebook has plenty of traffic, but it’s really not clear how successfully the sites can monetize it, even when they’re under the arm of a bigger corporate parent. What’s even less clear is if these sites will have any more staying power than previous social-networking stalwarts, which have turned out to be little more than fads over the longer term. While Yahoo’s shareholders probably do regret it passing on buying Google, it’s pretty doubtful all that many of them would regret the company not dropping a few billion dollars on Facebook.

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Comments on “Analyst Says Yahoo Not Buying Facebook Is Akin To It Passing On Google”

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Luke (user link) says:


I left school full time almost 2 years ago when Facebook was just starting and only open to colleges that had been manually added to the system.

Anyway, I still check it from time to time. Sometimes to catch up on people I went to college with and other times to see what the current students at my alma mater are doing. Turns out they’re doing the exact same things I did…only w/ pictures on an easily shared Facebook.

I don’t see Facebook going away any time soon so long as they can continue offering a very open system that’s some what secure to students. Basically if Facebook can continue to do what it is now without having to throttle or censor what people are doing then it will be around for a long time.

It’s like AIM – there may be better IM systems out there, but “everyone” has an AIM account. Facebook is becoming that for the college student. It’s becoming a tool to be used and it will probably hold on for some time. Essentially once it becomes embedded in a school then it will continue because it becomes a tradition to pass it along to the new people.

Cameron S says:

RE: A Reality Check Indeed

Buying Facebook or any of these fun but not profitable Web 2.0 sites is almost always the right decision. I really think the Web 2.0 market froth is quite irrational.

If I was google I would have used the billions of dollars to acquire YouTube for a different thing – creating an amazing talent search competition using the billions of dollars for countless prizes in many categories for the best Google Videos. That would generate buzz and web traffic.

FaceBook is not ever going to generate enough revenue to make an investment of such sheer magnitude worth it.

There is a finite amount of traditional and non traditional advertising dollars spent each year in the world, and there is a limit to how many internet ads, video injected ads, etc people will put up with each year.

Many people use Firefox and block some of the ads anyways, video ads are probably the future and most people find video ads on the web annoying at best.

Sanguine Dream says:


It sounds like anaylists these days will say anything that get them quote in the news and on blogs. Does it really take an anaylist to say that Facebook may be worth something? If that is the case then half the people using the internet are anaylists.

Yes sites like Facebook could be set up to generate lots of revnue one day but I’m just bored with all these experts and anaylists trying to predict the next big thing.

Brad Eleven (profile) says:

10 years ago...

… this same flavor of bogus buzz was going around. Please, let’s not have another dot-com bubble.

Webtech above is right–Google has plenty of cash, but Yahoo would demonstrate poor judgment by blowing billions on something they can’t capitalize on. Google + YouTube = popular ad platform. Yahoo + Facebook = vanity.

Anonymous Coward says:

Re: 10 years ago...

Correct. But wouldn’t quite say Yahoo + Facebook = Vanity. I’d say Yahoo + Facebook = Hoarding.

If Yahoo goes through with this deal it won’t because they think they can make Facebook profitable. It will be to stop someone else from capitalizing on it. Right now Yahoo is thinking, “We may not know how to capitalize on Facebook but we should buy to keep someone else from capitalizing on it.”

If Yahoo has a way to capitalize on Facebook and just won’t tell, fine. But these days its a corporate strategy to buy up something for the sole purpose of making use no on else can get to it first, even if you never use it.

Anonymous Coward says:

My God this 2nd bubble is worse than the 1st one

$8 B-I-L-L-O-N??????? For Facebook? College freaking students don’t have any money. Who else goes there. No really.

Look a better plan would be for Yahoo to build a Facebook like site, and then pay $5 for a six pack of beer (or whatever) to every person that cancels their Facebook account and sign up for theirs. Infinitely cheaper.

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