10 billion dollars? My god, if I was a major MSFT stakeholder, I'd be getting the tar and feathers ready.
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.
Oh, and I upvoted you by accident. Damn.
Because right now that's the best idea I've got for bringing the wall down :(
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).
(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.
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.
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.
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.