Microsoft to Take $240M Facebook Stake, Become Exclusive Ad Platform

Includes: GOOG, MSFT
by: SA Eli Hoffmann

Microsoft will take a $240 million minority stake in Facebook's next round of financing, at a $15 billion valuation. The companies will also expand their existing advertising partnership, which will see Microsoft becoming Facebook's exclusive third-party advertising platform. Microsoft, which already sells banner ads for Facebook in the U.S., will now sell Facebook ads internationally as Facebook expands to include foreign language social-networks.

Facebook is expected to earn $30 million this year, on revenue of $150 million, the Wall Street Journal says, quoting unnamed sources. Facebook, which boasts more than 49 million active users, and registers a quarter million new users a day, 59% of which are currently outside the U.S., is seen as the next big venue for online ads, especially since most of its users are in the young age group advertisers covet. Microsoft has built up a formidable online advertising sales force in recent years, a factor that will allow Facebook to shift the burden of ad selling to its better-equipped partner. By the end of 2007, 35% of the world's social networking users will be from Asia, 28% from Europe, the Middle East and Africa, 25% from North America, and 12% from the Caribbean and Latin America, according to Datamonitor. "Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world, and is a great win for not only for our two companies, but also our collective users and advertisers," said Kevin Johnson, president of Microsoft's Platforms & Services Division.

Earlier today, the New York Post and Wall Street Journal reported the stake was the subject of a fierce battle between Microsoft and internet giant Google (full story). The $240 million gives Microsoft just a 1.6% stake in Facebook, far less than the 5-10% stake rumored. It also appears there will be no third-party financial partner, as had been rumored. Microsoft shares gained 1.1% in regular trading, and are up 0.7% AH.

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