A recent "DealBook" posting in The New York Times quotes Richard Greenfield, an analyst with Pali Research, as saying everyone, college student or no, should sign up for a Facebook account. What's more, the major media companies should consider an acquisition. Whether Facebook is actually for sale is another question. Last year, unconfirmed rumors swirled that Yahoo! Inc. (NASDAQ: YHOO) was seeking to buy the social-networking site for nearly $1 billion. A founder of Facebook, investor Meritech Capital Partners recently told Fast Company magazine that "today, any offer around a billion would be way too low."
Although Facebook turns monthly revenue of $5 million to $8 million and showing little-to-no profits, Mr. Greenfield values the brand at multiple billions. His confidence is overwhelming, as he tells the Times: "Assuming Facebook's growth trajectory as we expect, the knowledge that could be harvested from controlling the Facebook platform would appear to be the most valuable data in the history of the media world." Hmmm.
The Times reports that Greenfield thinks a number of companies could benefit from having Facebook under its umbrella ... not just YHOO, but Microsoft Corp. (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), or Sony Corp. (NYSE: SNE). The analyst also says that Time Warner Inc.'s (NYSE: TWX) AOL should buy one of the other social-networking sites.
The site's leading competition, MySpace, was acquired by Rupert Murdoch's News Corp. (NYSE: NWS) in 2005. Murdoch is now reportedly trying to unload the site to Yahoo! for a 25% stake in that company, implying a value for MySpace of somewhere between $10 billion and $12 billion. Clearly, I must be in the wrong business.
I try to keep up with the kids today, so I opened a MySpace account a year or so ago. While I had the pleasure of finding an old high-school friend or two on there, several things about the site bothered me. I was constantly receiving "friend" requests from, say, fake versions of celebrities. The site was massively disorganized (you can only sort your "friends" by when they joined MySpace - not alphabetically or otherwise). The layout looked messy and seedy. And it was virtually impossible to know when a MySpace "friend" had updated his or her (or theirs, if it's a band) portfolio.
My tech-savvy friend Nicole sent me a Facebook invitation a few months ago. Although I at first wondered why I needed it ... and MySpace ... and Friendster (the Betamax of social networking) ... and LinkedIn, I signed up to see what the fuss was about. Facebook, in my opinion, is clearly the superior choice. For my purposes of keeping tabs in a fun way with old friends.
A clean look, a news feed to tell you when people are making changes to their profiles (and keep readers checking in periodically), and multiple ways to sort your contacts are all improvements over MySpace. Another huge improvement is the fact that it's much more difficult, it appears, to create faux profiles; everyone who has "friended" me has been someone I legitimately know or knew. The one advantage I can see with MySpace is the music feature: bands can share their material and easily provide tour updates - I see no such attribute on Facebook (yet), but it is constantly improving. Who knows where the site could go with a wealthy benefactor at its back.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
6-25-2007 @ 11:47AM
agavemail said...
It's always nice to see Greenfield blowing that much smoke. That kind of bravado is what every hacker loves to bring down.
6-25-2007 @ 2:47PM
Nicole Hollway said...
Bands and organizations are forced/allowed to use a much more user-centric medium for promoting themselves, the "Groups" application. Currently, the Groups app leaves much to be desired, but I can't imagine improvements aren't on a development list. The largest value in Facebook is the target marketing possibilities. However, that value will only be realized by the right company. As soon as a Microsoft (I shudder) or media company gets their hands on it, I can't imagine that the two-way-goldmine (user and marketer) will maintain its balance.