Microsoft Corp. found a friend in Facebook on Wednesday, paying $240 million for a small slice of the rapidly growing social networking Web site.
The deal, for which Microsoft reportedly beat archrival Google, expands the Redmond company's advertising relationship with Facebook and gives it an ownership stake in one of the hottest online properties.
But the companies were immediately questioned about the $15 billion value that the deal places on Facebook, which puts Microsoft's ownership interest at 1.6 percent. Earlier reports of that figure raised concerns about possible overvaluation of Facebook and other "Web 2.0" sites.
"Obviously, $15 billion is a pretty big number for Facebook," said analyst Brad Reback of CIBC World Markets, in the first question of a conference call in which the companies discussed the agreement. He noted that Microsoft Chief Executive Steve Ballmer was recently quoted commenting on the "faddish nature" of social networking Web sites.
"You can sit back and watch how this partnership is going to develop," the Microsoft executive said during the conference call. "There's a lot more we're going to be doing together."
Emphasis mine. Not incredibly newsworthy, but an interesting move and play out (Microsoft beating out Google). The idea that there will be further cooperation between the Redmond giant and Facebook is intriguing as well.