Another day in Silly-con valley. WSJ reports Yahoo is looking at Facebook, for somewhere around $1 billion. Yahoo-Facebook reports and rumors have been circling for a while now. The other Web 2.0 darling, YouTube is also for sale, for $1.5 billion. Viacom is a suitor for both companies (but Robert Young says Sumner Redstone should look elsewhere). Okay nothing to say, except let the people speak with their vote.
Update: Let’s not forget that Yahoo stock has dropped nearly 15 percent over the last three days! We think the WSJ put so much sweat into the Facebook piece it couldn’t bear to pull the story even when the deal likely evaporated this week. Yet 31 percent of you think the acquisition still stands a chance — maybe a Yahoo desperation move to pick up its spirits?
Meanwhile, comScore wrote in to share some Yahoo-Facebook numbers. In August, Yahoo had 76 percent of the U.S. internet audience of 173 million, while Facebook had 9 percent. The demographic contrasts are interesting, with Facebook filling out some of Yahoo’s smaller age groups.
| Age | Yahoo | |
| 12-17 years old | 9.4 percent | 14.0 percent |
| 18-24 years old | 11.4 percent | 34.0 percent |
| 25-34 years old | 15.5 percent | 8.6 percent |
| 35-44 years old | 19.0 percent | 12.3 percent |
| 45-54 years old | 20.8 percent | 21.1 percent |
| 55-64 years old | 11.3 percent | 5.3 percent |
| 65+ years old | 5.8 percent | 2.3 percent |
I can see YouTube being bought, the buz around it just seems to have the right character for a buyout. Question is, by who?
Facebook is not a sustainable business, it’s a fad. Sure it’s bringing in close to $100M in yearly revenue, but will that be the case in 10 years? How about 20 years? I bet most of you laugh when you hear MySpace and Facebook and “10 or 20 years” in the same sentence. 🙂
I’ll bet Robert Dewey didn’t use Facebook in college.
This M&A wave looks like a sign of the media business being disrupted.
When CEOs can’t figure out how to deliver growth on their own, investment bankers and shareholders nudge them along to consider big ticket acquisitions. At very high risk of failure.
Other warning signs at:
http://www.ondisruption.com/myweblog/2006/09/mediama_warnin.html
Rising M&A activity might be evidence of the media industry facing disruption. When CEOs can’t figure out how to deliver growth on their own, investment bankers and shareholders nudge them along to consider big ticket acquisitions.
Other warning signs of disruption which may apply in the media sector:
More at:
http://www.ondisruption.com/myweblog/2006/09/mediama_warnin.html
You would win the bet, Greg – I have no need for Facebook, that’s what AIM, phones, and e-mail is for. I know who and where my friends are, why do I need a service to tell me? 😉
My area of interest is emerging technologies that will shape the way people interact with computers… Those are the types of innovations that last over 10, 20, and +30 years (PC, operating systems, etc.). I’m sorry, but I just can’t see Facebook being worth $1B when there are far greater opportunities both in the present and future.
I agree that its only a matter of time before facebook is shut down. As soon as they open up to non .edu registrants the exclusivity is gone and people will migrate to niche sites that cater to their interests (dogster, mimun2, upoc etc.)
“I just can’t see Facebook being worth $1B”
The question is whether Yahoo will spend the $1B, though I do echo Robert’s opinions on the usefulness and longevity of the model.
It should be noted that over the long-term, most major acquisitions tend to result in decreased value for shareholders. I certainly hope, as a Yahoo shareholder, that this is a case of the WSJ not wanting to pull the story. Yahoo buying Facebook for this insane amount when its recent announcement indicates there are other major problems that need to be resolved would be a sign that management is not acting in the best interests of its shareholders. If this happens, I will sell my Yahoo holdings and move my money into a well-run company that shows restraint as opposed to desperation when it comes to acquisitions of companies, especially those that have been shown to have major vulnerabilities and questionable long-term prospects.
Uh, is that chart correct? It doesn’t make sense.
Is the % users of in each age bucket a reasonable stat? Assume they merge. Multiply the 173M audience by the share percents to get # users in each bucket. Add FB to Y, then regenerate the %s.
The new yahoo’s % breakdown then looks like this:
Age
Old Yahoo
Merged
Difference
12-17 years old
14%
13.9%
-0.1%
18-24 years old
34%
32.7%
-1.5%
25-34 years old
8.6%
10.1%
1.0%
35-44 years old
12.3%
13.2%
1.1%
45-54 years old
21.1%
21.7%
0.6%
55-64 years old
5.3%
5.8%
0.8%
65+ years old
2.3%
2.5%
0.4%
Doesn’t appear to really shift the age groups significantly.
The chart doesn’t make sense; facebook is currently open to only high school and college students. How could they have 50 year olds than college students?
“Facebook is a social networking service for high school, college, university, corporate, non-profit, military and geographic communities primarily in English-speaking countries.”
http://en.wikipedia.org/wiki/Facebook
List of social networking websites
http://en.wikipedia.org/wiki/Listofsocialnetworkingwebsites
timwizard, because facebook is open to high schoolers, college students, and also select companies/organizations.
Why are they for sale? Because, investors & founders are not stupid. YouTube in particular is burning cash & their model will never make money.
Forget about numbers such as 100m download per day etc. These numbers can go down to zero very fast.
Good luck to any company who spends $1B! They will need it!
I would’ve added one from left field…Viacom merges with Yahoo.
So let me get this straight. Yahoo basically announces that ad sales are declining yet is justifying paying $900 million – $1 billion for a company with around $50 million in revenues (hoping to be $100 million next year) based on the assumption that it can increase Facebook’s ad sales significantly? Seems like one of the dumbest moves Yahoo management could make, especially since Facebook opening up to everybody is going to alienate their audience. Why doesn’t Yahoo fix its current problem before going out and betting that not only is it going to increase its internal ad sales but is going to be able to do it significantly on an acquisition?
Robert: How do you know who your real friends are until they accept you on Facebook?
I just wrote a post commenting on this: http://www.participatemedia.com/?p=26
net net I think $1B for Facebook is conservative