Fresh Facebook draws attentionMicrosoft and/or Google might take a stake in Facebook that would value the social networking company at $10 billion, more than the paltry-by-comparison $580 million that News Corp. paid for MySpace.
Why would Google, Microsoft or any other suitor pay so much for a social networking Web company? RBC Capital Markets analyst Jordan Rohan explored the question.
He concluded that Facebook, like Google, is a technology company, not a media company, and that also like Google, it has lofty expectations of itself.
While Google intends to organize the world's information — and not just the stuff that already resides on the Internet — Facebook seeks to help people "share it, interpret it and refine it," Rohan says.
"There is a social graph in the world, which is made up of people's real connections," Rohan says. "Facebook's goal is to map out those connections and build a model of the real-world social graph."
To that end, hundreds of thousands of applications are under development, while just 4,000 or so individual applications have already been launched on the platform, Rohan says.
Rohan admits not having too much access to Facebook upper management, including CEO Mark Zuckerberg, but he attempts to analyze the corporate culture nevertheless.
About 350 employees occupy three small office spaces at Facebook headquarters in downtown Palo Alto, Calif., many of whom cheered out loud recently when it was announced a fourth office space would feature an after-hours bar for employee socializing. "Business casual," says Rohan, overstates the usual attire.
"Facebook would make the employees at Google and MySpace feel old," Rohan jokes. "And the management team does not seem overly concerned with its status among the entertainment elite."
It took a few years for people to realize Google's broad potential, as is the case with Facebook, Rohan argues. Bottom line, though: "Facebook's game plan, if executed well, could translate into an asset worth billions or more over the next five years."
Much of that value, of course, comes from the sheer volume of its faithful flock. From the humble beginnings of its creation in a Harvard dorm room, Facebook has grown into an online entity boasting 42 million active users, with 18 million of them coming from the U.S. and 20% of the entire population of Canada using Facebook, Rohan estimates.