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Is Yahoo Buying Facebook?

Posted by Nick O'Neill on June 6th, 2007 11:21 PM

There is a rumor circulating around the internet that Yahoo is buying Facebook for the sum of $2 billion. While there is the potential of Facebook getting bought especially with all the hype surrounding their new platform, I am highly skeptical of such a purchase. Techcrunch posted an article months ago that Yahoo placed a $1 billion bid with the financial documents to prove it. Now out of the blue has come the idea that they will renew and up their bid to a whopping $2 billion. This would be a hell of deal considering Google bought YouTube for $1.65 billion and their server costs are many times greater than that of Facebook’s.

I’m not sure how much cash Yahoo has but I know Google is down to around $5 billion (as of last quarter, but they are printing money practically as fast as the mint). Conversely, almost a third of Yahoo’s executives have quit in recent months and they definitely need something new to give them a kickstart. Facebook is now the closest potential future rival to Google given their exponential growth and their massive database of personal user data. Is the potential there for a buyout by Yahoo? Definitely. Do I think $2 billion is enough? Maybe. Although there is a ton of hype surrounding the new Facebook platform (this blog as a contributor of it), the real question is how much revenue is being generated. Given that Google brought in over $10 billion last year, my guess is that Facebook is currently generating somewhere in the range of a couple hundred million.

So were the Facebook executives just tooting their own horn to generate buzz when they valued their own company at $8 billion or were they just trying to entice a buyer? This is a question that will have to go unanswered for now but I can guarantee there will be huge revelations in the story of Facebook in the coming months. I look forward to see how the story unfolds!

Posted in Analysis
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This entry was posted on Wednesday, June 6th, 2007 at 11:21 pm and is filed under Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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