Internet Outsider

Time to Update Those Facebook Revenue Estimates

That Facebook rate card Valleywag published yesterday?  It was from February.  And, yes, February was eons ago, but who would have suspected that Facebook would have doubled its sponsorship rates in the meantime?  Well, it seems they have.  Valleywag's Owen Thomas reveals the June rate card.

Let's see, 150 group sponsorships times $300,000 per sponsorship for three months ($1.2 million per year), and you're at $180 million in revenue.  And that's before the home page sponsorships.  And the $200 million three-year display deal with Microsoft.  Etc.

Do clients get discounts off the rate card?  Of course.  But even with the sponsorship rates set at half of what they apparently are today, director Peter Thiel's $150 million 2007 revenue number looked reasonable.  And the more pertinent question is what 2008's revenue number looks like.  And 2009's. 

MySpace will reportedly do $1 billion in revenue this year, only a year or two after finally getting serious about selling ads. Facebook's sponsorship rates have doubled in 5 months.  Google's doing $16 billion in revenue.  Is it really so unreasonable to think that Facebook might hit a $1 billion run-rate within a year?  In a word, no.

So here are some updated Facebook revenue estimates:

2007:    $150 million ($200 million? $250 million? Who cares?)
2008:    $750 million
2009:    $1.5 billion

MySpace: $1B of Revenue in 2007 UPDATED

UPDATE:  Turns out Erika (below) got bad information.  I've rerun MySpace estimates based on Murdoch's recent comments.  Updated estimates are $600 million in calendar 2007 and $1.2 billion in 2008.  More on Silicon Alley Insider...

In a lengthy piece on the trials and tribulations of UGO Networks, Forbes' Erika Brown drops in an interesting nugget: MySpace is expected to do $1 billion in revenue this year.

Now, people have been sticking their fingers in the wind on MySpace revenue since the day Murdoch bought it, but Forbes has better insight than most.  In December, Technology Editor Peter Kafka (now Managing Editor of Silicon Alley Insider) wrote a profile of Murdoch in which he put MySpace revenue at "$30 million a month", or a run-rate $360 million a year.  Forbes's Brown presumably has similarly strong Fox relationships, and she's now pegging the 2007 number at $1 billion.  Assuming solid month-to-month growth off the $30 million December number, the $1 billion isn't even a stretch.

Four conclusions:

1. $1 billion is real money, perhaps even enough to finally silence those who continue to argue (pray) that advertisers will NEVER risk being associated with, gasp, user-generated content.
2. If MySpace can generate $1 billion in revenue, then so can Facebook.  So the $10 billion price tag on the FOR SALE sign Facebook hung around its neck last week actually makes sense.
3. News Corp's $580 million MySpace buy was, indeed, a steal.
4. New York-based Fotolog, which is closing in on the 10 million member mark and closed a big deal with Google last week, could end up being worth real money some day, too.

A place for big bucks.

Facebook Puts Self Up For Sale: $10 Billion

[From Silicon Alley Insider]. Few seem to have noticed, but Facebook has now officially put itself in play.  Peter Thiel, a Facebook investor and director, granted a detailed interview to The Deal last week in which he rejected several lowball offers that have reportedly come over the transom--$3 billion range--and essentially offered to sell the company for $7-$10 billion.  The announcement would not have been any more direct if Facebook had written an open letter to Google saying: "Dear Eric: $10 billion and we're yours."

Yes, of course, Thiel also threw in all the required noises about how Facebook has no interest in selling, no interest in going public, etc., to make sure that when Google does walk in the door, it will be the Google folks who are selling.  He also explained why Facebook wasn't ready to sell (not developed enough) and why those who gripe about Facebook's low revenue are missing the point (we don't care about revenue yet).  But make no mistake: Any time a company is this specific about what it would take to get it to the table, it's for sale.  What's more, it's probably for sale at the low end of Thiel's $7-$10 billion range.

As a last gesture of helpfulness, Thiel was also kind enough to tell everyone how much revenue Facebook will generate this year--$150 million (so assume at least $200 million--have to set the bar low)--of which half comes from the Microsoft deal.  So, there, Google and Microsoft investment bankers, you now have everything you need.

Let's see, at today's Google stock price of $515, a $10 billion Facebook buy would amount to about 6% -7% dilution.  A veritable tuck-in!  And none of the copyright headaches that came along with the $1.7 billion YouTube acquisition.  Microsoft?  Why, you'll generate $10 billion in cash in the next few months.  So, step right up!  Yahoo? Um, sorry, missed your chance last year when you could have had it for $2 billion. David Shabelman, The Deal.  DealBook, NYT

Rumor of the Day: Microsoft for Facebook for $6 Billion

No, of course we can't confirm it.  But it makes sense, don't you think?  Steve Ballmer, desperate and furious, sick of sucking wind in the Internet game, sick of losing every Internet in-play company and much of the future to You Know Who, sick of feeling like a has-been also-ran, raiding the bank account and snapping up the hottest company on earth.

The fly in the ointment: $6 billion's a nice fat number, but it's only 1/25th of Google's valuation, and the Facebook folks clearly think they're worth more than that.  So maybe Steve will have to throw in another $5 or $10.  Or $20.  Or maybe Mark Zuckerberg will just tell him to go...home.