Justin Credible

Twitter and the Revenue Dilemma

When it comes down to most web 2.0 companies, I am assuming they will have to turn on the revenue switch due to the fact a lot of companies want to enter the IPO game as well as them receiving cash at record valuations due to the major players trying to out bid each other. Facebook for example allowed themselves to receive a $15 billion dollar valuation. No profits to justify that number, just pure speculation from Microsoft. Now there can be no buyouts without some sort of debt financing. Who is willing to do that on a company with a balance sheet in question? I highly doubt Microsoft would exchange equity and cash to do the deal as well. Your options, 1. keep your valuation small enough and your balance sheet hidden so that your company can be bought out for cash and equity off pure speculation a la YouTube, or 2. go for maximum value by turning on the revenue switch, make loads of cash, go public, increase your equity value, and then cash out, a la Pay Pal.

Cash Burn: Why Facebook Will Have to Sell Out to Microsoft

Nope, the stake is 1.6%. I am curious as to whether they(MSFT) will keep that $15 billion valuation if this deal were to ever surface. Does anyone think that micro payments system they(FB) are planning will make them Google like earnings?


On May 18 07:58 AM Bonemesly wrote:

> Doesn't MSFT already own a majority stake in Fbook?

The Real Internet Rivalries

"Long term, even if Facebook seems to be more valuable, MySpace will generate far more revenue."

Agreed. People forget that even with all the growth and popularity, Facebook makes half the amount of revenue Myspace makes currently(350mil - 700 mil).

Twitter, Facebook Grossly Overvalued: 'Build Traffic and the Profits Will Come' Isn't True

Half a billion in startup funds($515 Million), yet they can't even make half the revenue of Myspace($700+ million)? Where is the viable business model? The growth is there no doubt. I remember Mark Zuckerberg said this thing would be bigger than Google. It would take Facebook years to match the annual revenue of Google(Facebook: 300 million, Google: 21 Billion). So I ask again, whats the business model? More display ads or virtual gifts? We can't compare it to pets.com, cool. Lets compare it to Friendster and Myspace, two social networking sites billed as the next big thing only to have their value reduced by a lack of growth in revenue, not traffic. Mark is the only CEO who can say the focus for a business is growth and not money. Could you picture Bill Gates saying such a thing?

On Apr 08 12:42 PM Cetin Hakimoglu wrote:

> Facebook's huge valuation is based off network traffic. I'm sure
> wall street would also value it accordingly. There is no comparison
> to pets.com and facebook or twitter in that the later actually has
> a viable business model and growth.

Twitter, Facebook Grossly Overvalued: 'Build Traffic and the Profits Will Come' Isn't True

Great article Micheal. This has been the case since day one but the hype has blinded everyone.

Twitter, Facebook Grossly Overvalued: 'Build Traffic and the Profits Will Come' Isn't True

Sorry, but the 1990's were totally different. Wall Street valued web sites based on network traffic. Not the case anymore. Google and Microsoft may do it, but why did we have a crash on the NASDAQ in 2000? Because everyone figured out that those websites(Yahoo, Pets.com, Web Van, the list goes on) did not make enough money to justify those ludicrous valuations(your dot com bomb). It's been 5 years for Facebook and still no IPO, I wonder why? Yahoo has 500+ million users, but is only worth 1/6th of Google's market cap. Go and look back at Yahoo's stock. It was never the same after the crash. Don't believe the hype, you need a solid business model if you wish to have a solid business.

On Apr 08 06:16 AM Cetin Hakimoglu wrote:

> Sorry, but Twitter and Facebook are far from being overvalued considering
> they dominate their respective niches and have huge growth and revenue
> potential. Facebook is like Yahoo in 1997 and twitter could revolutionize
> communications like email did in the mid 90s.

Does Facebook's Rapid Growth Hurt or Help Google?

"if social media ever finds the right business model and attracts serious ad dollars from other online media"

Yahoo has 500+ million users and their market cap is worth 1/5 of what Google is. Traffic means nothing, it's about profitability and conversion(users to payers). According to Alexa, the sites with the most traffic are: Youtube(google), Live(msn), Yahoo, Google, then Facebook. Out of all of those, only Google makes serious cash and the organization is not under restructuring(Yahoo), lack of a sound business model(Youtube), or they are not losing money through their internet strategy(Msn, has the Facebook ad partnership made them the ROI they would of wanted?). Traffic means nothing when it comes to Wall Street, only dollar figures. Think about this question, 200+ million users that pay you nothing or 20+ million users paying $250+ dollars a month? Give me the 20 million any day.

How to Create a Profitable Desktop Business for Linux

1 problem I see with this. You need cheaper hardware to be competitive. Users won't choose an expensive PC with Linux over Windows, the cheaper hardware will fatten up margins and performance will still be great, cause we all know you don't need 2 gb ram, 3ghz cpu, and a 256 pci express video card to run Unbuntu, BSD, Suse, etc. But who will make the cheaper hardware, Intel or AMD? Good luck with that. Bottom line, lower hardware costs if you wish to see open source gain market share. I.E. 1 Ghz cpu, 256 SD Ram, 20 GB hard drive, 17' crt, Unbuntu Linux, fully loaded with apps like open office, mplayer, etc. $149-$199.