Nicely done, Ahmed. I’ll admit that the first thing I did when I saw numbers was do the math… So I think we can say that MS values the Facebook membership in 4 years at $15B, if not the company itself today… which is not quite the same thing.

How true. How stupid some bloggers are.

Well yes Michael – to get more in-depth, with $240 million they got 1.6%, extended/expanded ad deal, and removed the competition.

The $240 Million was just for the stake in Facebook. That’s what values it at $15Billion. The extension of the ad deal is big for Microsoft but that nothing to do with the purchase price.

How this typically works is that Microsoft probably offered a bigger percentage of Ad revenues than Google or Yahoo. So It’ll be Microsoft’s ad platform supplying ads and Facebook will probably get 60-70% of those ad dollars through Microsoft. The fact that Microsoft bought a small piece doesn’t have anything to do with the ad deal in terms of Money.

However agreeing to own a piece will help in negotiations against the likes of Google and Yahoo.

There were actually a couple of Hedge Funds that pumped almost $500 Million into Facebook and got almost the same 1.6% that Microsoft did.

Facebook’s value is $15Billion because that’s what people are paying for piece of it. The Advertising partnership money is separate and will be coming to Facebook through the years from Microsoft.

[...] is a timewaster (and it’s certainly possible to waste an inordinate amount of time on there), Ahmed also has some thoughts worth thinking about how we valued Facebook.    Marc seems to have the best take on [...]

MS has a lot of money. Hell they made over 4 billion dollars in the last quarter. $240 million is not ‘that’ big of a risk for the possible rewards.

Plus, at the suppoused $15 billion ‘valuation’, they are just creating quite the headache for Google and Yahoo.

The value of face book right now is huge, whatever way you look at it. I’m not entirely convinced that it’s all that good of a long term investment though, while it’s obviously not a flash in the pot trend I don’t believe it will have the staying power some people seem to be giving it credit for.

MS invested 240million for an ownership stake of 1.6%. They don’t give up that ownership at the end of the ad contract. That very simple fact sets facebook at a current valuation of $15billion. what is so difficult to understand?

the ad agreement can be a simple experiment or a deterrent for other companies to invest or it can be totally irrelevant. the only relevant fact is, regardless who takes over the agreement 2011 and further, MS will continue to be an owner at 1.6% stake.

This valuation will not change unless tomorrow someone comes and grabs a 1.59% stake at 240million of above.

The good thing is that MS by doing that (and by overpaying a bit) sets the price for Faceboook so high that nobody will be willing or able to buy it. In other words it guarantees that Facebook will stay independent, and in good terms with MS (because of the ad deal and the fact that provided such a high valuation and cash). To me it was a brilliant move. Also note that Yahoo and Google were just outside the door but probabaly they wanted a bigger share of the company. MS prefers to see Facebook by itself rather than part of Google or Yahoo. – Leo

I guess since MS saves time and money by following trends of other tech leaders, and since they charge an arm and a leg for their apps, they can afford to sink a few million into social networking, which is already heading downhill as it is.

[...] ce que souligne Ahmed Farooq dans son blog. En effet, l’accord publicitaire entre les deux groupes qui devait [...]

A great opportunity to stop using sites such as facebook, Micro$oft just wants to know about everyone’s preferences, since they already know what you listen to, now they’ll have a name “ yours” to sue if they don’t like the way you obtain your music, people stop using these type of sites!!, specially if they are owned by corporations.

I do not know how or why this Ahmed can speak for Microsoft… If you bought a garage in a house for a certain—for whatever reason or use you might have in mind and for however long you want to use it—then the price of the house can be deduced from the price of the garage itself!… This Ahmed is a charlattan…

And I also mispelled “charlatan.”

What will the value do when ordinary folks figure out WHY we have a domain name system in the first place, and consequently leave Facebook and the like in droves. Mention proprietary “social” networking in a year and everyone will think “trashy, cheap, unprofessional, pathetic, stupid”. Oh, we think that already – it’s a year on since the last post. I guess things like Facebook, cigarettes, casinos, opium, hotmail, subprime, etc. can only fool so many people for so long, then we mostly get wise to them. Those that don’t earn the label “loosers” and carry that stigma, because however unkind, that’s what they are.

Well Microsoft isn’t paying the 240 mil for the 1.6% some people have failed to understand that the money is also going towards eliminating the competition. Facebook would have asked for quite a larger amount to do that as they will be losing lots of money from lots of different investors. You cannot value a company on the basis of a business offering. They must also take into account the lifespan of social networking websites, whether Facebook decides to start charging money to use their service etc….there is too much to take into account to simply base the value of a company on one business transaction.