|
Seattle: Microsoft Corp beat out Google Inc on Wednesday in a battle to invest in socialising website Facebook, agreeing to pay $240 million for a 1.6 per cent stake in the Web phenomenon.
Microsoft also clinched exclusive rights to sell ads on Facebook outside of the US as part of the investment that valued Facebook at $15 billion - on par with the market capitalisations of retailer Gap Inc and hotel chain Marriott International Inc.
Analysts said Microsoft paid a steep price on a bet that the three-year-old company would be able to transform itself into a hub for all sorts of Web activity.
"The only way this works is if Facebook becomes sort of the users' operating system on the internet - everyone logs into Facebook every day to get in contact with their friends and use a multitude of future applications that will be developed for it," said Morningstar analyst Toan Tran.
Facebook, a social network that lets friends share information, allows outside developers to create games and other applications on its website.
Value
The popularity and depth of knowledge Facebook has about its users makes it valuable to companies like Microsoft and Google which want to sell advertising targeted to individual preferences.
Founded in 2004 by Harvard student Mark Zuckerberg, Facebook said it registers 250,000 new users a day, 60 per cent of whom come from outside the US.
Kevin Johnson, president of Microsoft's platform and services division, said the $15 billion price tag for Facebook is based on Microsoft's belief that the site could eventually reach 300 million users, who can be targeted for advertising. It has nearly 50 million today.
"You combine the number of users with the monetisation opportunities and you can figure out a fairly modest average revenue per user per year and you can very quickly get to this level of valuation," Johnson said in a conference call with analysts and the media.
|
