October 25, 2007 – (HOSTSEARCH.COM) – Microsoft has taken a 1.6% stake in Facebook, the online version of the Wall Street Journal reported today. The move represents a $240 million investment for Microsoft and gives the three-year-old social networking site a value of $15 billion. According to a variety of reports, Facebook’s decision was the result of “intense lobbying” by Microsoft and went in the face of speculation that had linked it with Google.
Facebook’s $150 million revenue will see the site break even this year, but its high valuation versus limited revenue suggests an underlying market trend of interest in sites with lots of visitors, but limited income. To many, this trend smacks of the Internet bubble of the 1990s, but both Microsoft and Facebook insist the Facebook valuation is valid based on potential advertising earnings.
Facebook was created by Mark Zuckerberg while at Harvard University. The site offers web pages to users who provide information about themselves. Using the information users find ‘friends’ and send each other email. For many, such sites have become a replacement to the Internet per se, providing an email solution to many and offering others an alternative to traditional hosting services. Businesses and commercial websites often have pages on such sites and social networking marketing is increasingly becoming recognized as necessity alongside more traditional marketing approaches.
