Facebook IPO could mean big money for Microsoft

Tomorrow, Facebook is expected to launch its public stock offering in an event that could be one of the biggest such IPO launches in recent memory. There are estimates that Facebook could be worth as much as $104 billion when the IPO starts.

All of that money could mean a nice return on investment for Microsoft. The Seattle Times reports that, because Microsoft owns 1.8 percent of Facebook, Microsoft's share of the company could be up to $1.6 billion.  Microsoft spent $240 million to buy a piece of Facebook back in 2007, which was a relatively small investment. By contrast, the company spent $8.5 billion to acquire Skype a year ago.

Microsoft has already announced it plans to offer 6.6 million of its Facebook shares as part of the company's IPO launch. That means Microsoft could make as much as $250 million immediately from the IPO, paying off their investment with a slight profit right from the start.

The article also points out that Microsoft and Facebook have already had some other financial dealings. One of them happened just a few weeks ago when Microsoft sold 650 patents it had acquired from AOL to Facebook for $550 million. That helped Microsoft get back about half of what it paid AOL for those patents.

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Skwerl said,
Facebook's going to be a good one to short in a few weeks.

agreed.. I dont think it will hold its value over time, but I have to imagine Zuckerberg has something up his sleeve to bring in more $$

Skwerl said,
Facebook's going to be a good one to short in a few weeks.

maybe in the short term .. but I believe in the long term it could be bigger then google.. They have everyone giving them their information where as google has to find ways of getting your information without you knowing about it.. Facebook is the number 1 website on the internet and has linked everyone on the internet for the first time in history.. its very difficult for people that are social to quit facebook because so many others use it to communicate.. I think it had reached its critical mass about a year ago where its growth can not go down for another few years..

DrakeN2k said,
It is the dot.com bubble again

how so? the .com bubble had 100's if not 1000s(?) of overpriced quick start up sites. Facebook is an established brand with at least some history. the .com bubble was mostly the "out of nowhere" companies. With shares starting between $34-$38 this will just be a nice feeding frenzy for everyone wanting a piece of the pie. Im sure the same people never thought google shares would be trading at $600+ either

DrakeN2k said,
It is the dot.com bubble again

It's not the dot.com bubble as these companies have business plans and profits. The question is if they are overvalued or if original investors just want to make an exit on IPO day.

simplezz said,

Couldn't agree more. Facebook's userbase has already plateaued, so where's the growth going to come from? I fear this is just a repeat of the dotcom bubble.

Growth will have to come from making better use of their user base. I think Facebook really wants their new "Deals" feature to succeed, but I haven't seen much of it at all, despite it having supposedly been introduced.