Will Microsoft Drop $10B On Facebook?

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cashmoney.jpgYesterday it was reported that Microsoft Corp. is currently in discussions with Facebook Inc. to invest in the social network. The investment could be upwards of $10 billion.

According to the Wall Street Journal, Google Inc. has also been approaching Facebook regarding a potential investment. Should Facebook agree to an investment, the privately held company may give Microsoft up to a 5% stake in the social network. That stake would be worth between $300 million and $500 million.

There is no certainty yet as to whether Facebook will accept any company’s offers. All talks are in the first stages and there are still details to be discussed before serious consideration.

Facebook is estimated to make $30 million in profit this year on revenue of $150 million. The investment into the site could benefit Google or Microsoft alike, giving them greater exposure to the exponentially growing social network audience.

This investment by Microsoft would also boost the company’s ad platform. With Facebook’s targeting information, Microsoft could gain more momentum to catch up to its competitors.

Microsoft could also be expanding an exclusive deal made with Facebook last year which stipulates that Microsoft will serve the display ads for Facebook. As of now this deal will bring in about $75 million for Facebook this year and somewhere around $200 million to $300 million by 2011, depending on traffic to the site. The new discussion is to potentially extend the contract past 2011 and to include other countries than the United States.

Even though many other companies are looking to get a piece of Facebook, Facebook is looking to get a piece of other companies as well. The firm seems to be looking to raise money to expand and invest and acquire.

The social network is also thinking about fund raising from financial investors as well as, or instead of an investment from Google or Microsoft. Accel Partners, Founders Fund, and Greylock Partners are among the venture-capital firms that have given the company $40.7 million.

Microsoft and Yahoo have both attempted to buy the company, however founder Mark Zuckerberg is maintaining his goal to keep the company independent and then take it public.

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