Breaking News: Facebook in talks with Yahoo for rumored $1B deal
The WSJ is reporting that US Social Networking site Facebook is in serious talks to sell itself to Yahoo, for an amount that may be as high as $1 billion. According to the WSJ, this is a return to the acquisition talks which Facebook has held over the past year with Yahoo - as well as Microsoft and Viacom.
If this deal goes through (and strange it should follow this week's news of Yahoo's online advertising woes and subsequent stock price drop), then most likely it will top News Corp's acquisition of MySpace last year for $580M. And it'll be more proof that social networking sites are seen as prime online advertising fodder for new media and technology companies. Note that last month Viacom was rumored to be after UK SNS sensation Bebo.
The WSJ article is behind a paywall, but here is the link. Thanks Honor Gunday for the tip.
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I think it's great that so much excitement has been generated by the big social networks, and their acquisitions, but unfortunately this makes the prospect of a huge industry wide crash even more likely.
Posted by: Matthew Ogston | September 21, 2006 7:02 AM
Matthew,
Maybe its not so bad. This is going to happen only for a few companies. The key question is: Is Facebook worth the money.
Incidently... Does this mean LinkedIn is going to be next?
Alex
Posted by: Alex Iskold | September 21, 2006 7:07 AM
You're right Alex. It's only bad if Facebook proves to be a poor investment. MySpace seemed overpriced when they announced their acquisition, but Mr Murdoch has already turned that deal into a resounding success. I should stop being to pessimistic on a Thursday afternoon... ;o)
Posted by: Matthew Ogston | September 21, 2006 7:27 AM
Your concerns are not without ground, as I remember vividly the burst of previous bubble. And I think that these are excellent discussions to have - can we quantify if these so called web 2.0 companies, or as Richard calls them, new social era companies worth the money?
It is pretty obvious that they created A value (cap A intended), since hundreds-of thousands/millions of peope are using Facebook, etc. there is definitely A value. But how do you assess if 1B is a fair price? The old saying goes you are worth as much as someone is willing to pay for you, holds true.
The evaluation ball is in the Yahoo!'s court. Will they be able to derive value from this acquisition over time? So far with del.icio.us and Flickr they have not done as much, as they still maintain mainstream equivalents in their portfolio.
I think that Facebook is much more of a mainstream product, at least conceptually, than del.icio.us, and it could be put on the fast track to become even more wide spread.
Alex
Posted by: Alex Iskold | September 21, 2006 7:38 AM
This posts begs the obvious next question — if Yahoo buys Facebook (likely in a move to get Facebook users to utilize more of Yahoo, and to get Yahoo ads in front of these kids)…. what happens to Microsoft (whom just signed a deal with to display ads on Facebook.com through 2009)… or rather, will Yahoo own Facebook.com, but have to live with Microsoft ads all over the website through 2009?
Posted by: Steve Poland | September 21, 2006 8:39 AM
Thats a really good point, Steve! Mostly like the deal is just about ads and no other commitments, but I would bet that in the agreement it states that ads must continue in case of an acquisition, so the answer then would be 'Yes'.
Alex
Posted by: Alex Iskold | September 21, 2006 8:41 AM
As a former insider who wrote this book about it, I don't believe it will happen. Yet.
Posted by: Karel | September 21, 2006 10:18 AM
I hate the idea of FB being sold. If they do get acquired by Yahoo!, I hope it will be seamless, like del.icio.us. I know Konfabulator got bought by Yahoo! and now it's called Yahoo! Widgets and has a certain level of branding. If Yahoo! get FB, I hope everything stays the same.
I don't mind have a few Yahoo! ads around, but that's about it.
Posted by: Mark | September 21, 2006 11:34 AM
More indicators that the offer has been made:
http://news.com.com/2100-1038_3-6118336.html
Alex
Posted by: Alex Iskold | September 22, 2006 12:58 PM