That would value the site as a whole at between $6bn and $10bn - and the site says it has 42m users worldwide. The upper valuation values each of them at a tidy $238.09 each. Slightly less, now that another dozen have joined while you read this sentence.
The question is: where exactly does that value reside? Facebook is profitable, expecting to turn a profit of $30m on revenues of $150m. But those numbers hardly put it among the leviathans of online commerce. That profit works out to 71 cents per user (slightly less now ... ); to realise that $238 figure, either everyone will have to go on using Facebook for the next 335 years, or the site will have to dramatically increase the profit it makes per user. Charlene Li, an analyst with Forrester, thinks the numbers could add up: "Ad spending is roughly $2,500 per adult in the US. $250-$333 represents between 6% and 10% of ad spend. If people spend as much time as they potentially could within Facebook, those numbers are feasible." But that does assume that ad spending holds up and that people don't tire of Facebook in the meantime.
Three theories are now swirling around the discussion: that Microsoft is deadly serious, and sees Facebook as its entry into the new world of web services which it has struggled against its ageing self to embrace through services like MSN Live; or that Microsoft is trying to get Google and, possibly, failed Facebook suitor Yahoo! (which had a billion-dollar offer turned down by Facebook founder Mark Zuckerberg last year) to pitch in with even more ridiculous offers for a tiny slice of the site; or that Zuckerberg is holding out for an offer that would value the site at $15bn.
The second theory is interesting because a 5% stake would offer no control, while the money paid would fund Facebook for a long time into the future, to a stock market flotation - said to be Zuckerberg's favoured path. And Microsoft already has a lucrative contract to serve ads on the site until at least 2011.
Yahoo!, though, is drawing in its horns from big acquisitions after ejecting Eric Semel as chief executive in June, replacing him with Jerry Yang, one of the founders. And Google's purchase of a 5% stake in AOL for $1bn in December 2005, narrowly beating off Microsoft, put a $769 price on every AOL user's head. Since then, AOL's value has plunged. Google might not get fooled. Will Microsoft?
I chose this story because the article title grabbed my attention. I recently joined Facebook myself due to its populairty and what it offers is completely different to other social-networking sites, and not to forget the lame emails from mates inviting you to join, so i came into the interest of reading this article.
Every Facebook member should know, what is happening when a new person joins, so $238.09 is made from every subscribed member. Facebook is number 1 in UK for online Social Networking, in which creates millions of profit in its turnovers. On the other hand Microsoft being known as a massive massive Industry, still wants a share in Facebooks profits, by investing between $300 to $500 million dollars for just 5% stake, but can it be an extra pocket money for Microsoft, well YESS!!!
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