Microsoft/GOOG Competing for Facebook? Price Going Up


And you laughed when we said Facebook could be worth $10 billion.  Oh ye of little faith! 

WSJ: Microsoft (MSFT) is in talks with Facebook about making an investment in the social-networking startup that could value Facebook at $10 billion or more… Google has also expressed strong interest…

If successful, Microsoft’s talks with Facebook could give it an up-to-5% stake in the closely-held startup—a stake potentially valued at roughly $300 million to $500 million. The discussions are still preliminary and Facebook could wind up not taking an investment from either Microsoft or Google. Factors in the discussions include the valuation the suitors would offer to Facebook and other business considerations they could contribute to sweeten any deal.

Guess what?  If both Microsoft and Google are at the table, the price is going up.  Google has demonstrated over and over again that when it wants to win deals, it will bid whatever it takes.  Microsoft has demonstrated, finally, that it is so sick of losing deals to Google that it will occasionally bid whatever it takes.  (Meanwhile, the hapless Yahoo, which used to be invited to such bake-offs, is gazing at its own navel in Sunnyvale.)

The WSJ says that Microsoft is balking at Facebook’s counter of $15 billion.  Google would pay $15 billion in a heartbeat, so we expect Microsoft will soon stop hyperventilating and pony up.  Did we say a $10 billion valuation?  How about $20 billion?

See Also:
Is Facebook Worth Half of Yahoo? (at $15 Billion)
Facebook Puts Self Up For Sale: $10 billion
Battery Ventures: Passing On Facebook “May Turn Out to Have Been Mistake”