As soon as news leaked, we reported back in September on how Microsoft Corp wanted to buy a minority stake in Facebook.
The Wall Street Journal reports that Microsoft has pumped in $240 million as investment in Facebook Inc. Now, Microsoft owns 1.6% stake of the leading social networking site.
"The software giant said yesterday that it will buy a 1.6% stake in Facebook, beating out Google Inc. after intense lobbying. The deal places a $15 billion valuation on the closely held Palo Alto, Calif., start-up. Facebook, which runs a site where people set up personal Web pages, expects to break even this year, on a cash-flow basis, with revenue of $150 million, according to people familiar with the company."
Kevin Johnson, president of platform and services at Microsoft, said, "We're pleased with the economics of this deal," and further added that Microsoft and Facebook have "both learned a lot" from their experience with Facebook ads.
"The deal is rooted in an online-advertising boom that has turned Facebook into the newest Internet darling. In recent years, advertisers large and small that once focused their spending on television, newspapers and other traditional media have started shifting their spending to a host of Web sites. Google has built its fortunes on that shift and others including Microsoft are rushing in. Winning Facebook's hand could help lift morale at Microsoft's struggling online business. Over the past four years the software giant has invested heavily into building its own Internet search and online advertising services but has failed to keep pace with the growing online ad market and its leader Google."
According to reports, Mark Zuckerberg, 23, will not make an initial public offering for the next 2 years. Facebook aims to become an ad magnet by substantially increasing its current audience of nearly 50 million active users.
About their loss, all Google's Vice President Tim Armstrong said was, "We have tremendous respect for them as a company."