I disagree. Over 20 million people use FB every single day. Over 40 million active users(used it within 30 days).

They have something in there to monetize, big time. Watch, $20 billion today would be a steal. FB will be worth $100B in 3 years.

Agreed. A lifetime user of facebook is worth $500, easy. I don't see what is going to get me to leave the platform, ever.

Myself in 1999: 'A life time user of AOL is worth $500 easy. I don't see what is going to get me to leave the platform, ever.'

Interesting point, but I would guess AOL made $500 off each user they had in 1999.

They also charged money though. Unless everyone just stocked up on those 500 hours CDs.

I disagree. The usage was very different.

Oh, and I upvoted you by accident. Damn.

People constantly nagging you about supporting walled gardens?

Because right now that's the best idea I've got for bringing the wall down :(

Keep in mind also that a strategic investor is always willing to pay more for the same stake than a purely financial investor.

This is because the strategic investor -in addition to reaping financial rewards- will also gain something else. In this case, it could be an exclusive agreement for Microsoft's ads, or use of MSN as the default search engine, integration of other MSN products, etc.

Even if Microsoft's deal puts a nominal valuation of $10B on Faceboook, Facebook's IPO (if it happened) could put the valuation lower.

Btw, this is an important point to note when evaluating exit strategies. Depending on the circumstances, getting acquired could be a much better exit even if the public markets are interested in your IPO. Youtube was probably not worth $1.6B based on just its financials, but it was worth that much to Google (or at least Dr. Schmidt thought so).

Isn't Vista enough of a reason to get the tar and feathers ready? ;)

Can Microsoft, with a $237 billion capitalization, or Google, $177 billion, could afford acquiring Facebook at $10 billion (nevermind the $15 or $20 billion that they seem to expect)?

(In any event, they seem to only want a small stake.)

Last I heard their revenues were less than $50 million. This puts their P/E ratio in the triple figures. The whole business seems too risky. I don't think I would sleep well if I had a lot of my money in Facebook.

P/E ratios in cases like this can be misleading - it is hard to predict earnings for what is the poster child for the social app phenomena.

Put another way, facebook isn't really focusing on monetizing its users yet - it is (rightly) focusing on becoming the platform of choice for the social web.

10B might be a steal in the long run if you believe a site like this is the future of content distribution or advertising.

While I agree about the P/E ratios, I think Facebook has definitely started monetizing it's users, short of charging them a monthly fee anyway. Logging in now gives me a home page with banner ads to the left, and at least 3-4 ads in my 'News Feed'. Not to mention the marketplace aspect of it. If Facebook becomes the de facto identity manager on the web, I could see a sky high valuation like this, but I think they will piss off their users if they keep going like this.

I read somewhere else that they suspect that Microsoft just wants the 5% so it has more control over serving ads, much like Google owns 5% of AOL so it can serve a ton of ads to AOL users/visitors.

The ads on Facebook get abysmal clickthrough rates (often less than 0.1%). $10 billion is a P/E of more than 300, and even for a very hot company, that is pretty far into outer space. If these are in fact the numbers being thrown around behind the scenes, you're probably right that it's because Microsoft wants a place to improve its ad serving (and to deny Google that same place).

Something tells me this approach towards the concept of platform, will be the beggining of the new bubble every single irrelevant reporter has been praising for the past 2 years.

And there are a tons of reasons that make it clear to a technology person, that bussiness persons will ignore and some will get the money and others lose big.