Thursday, 25 October 2007

Facebook valued at $15 billion

Yesterday, after losing many battles to search giant, Google, Microsoft finally won one in its bid for a stake in the social network Facebook. Microsoft agreed to buy a 1.6% stake worth $240 million (£120 million) of the company in a transaction that values Facebook at $15 billion (£7.5 billion).

The arrangement with Facebook will give Microsoft control over the placement of banner ads on Facebook outside the U.S. Outside the U.S. Facebook have about 60% (49 million) active users. Microsoft had already reached agreements to sell U.S. banner ads for Facebook through 2011. Facebook, run by CEO Mark Zuckerberg, is among the hottest on the block site, growing by 200 000 registered users every day. Facebook received nearly 1% of all internet visits in the week that ended the 20th October 2007. Over the last year, Facebook’s traffic has more than doubled and with the valuation for Facebook at $15 billion (£7.5 billion) it makes the $580 million (£290 million) News Corporation paid for MySpace look like an outright bargain.

Google already has a lock on placing ads on the top social networking site MySpace. In a transaction outlined in 2006, Google is in charge of placing search-related ads on MySpace. Google also serves as the main MySpace search engine. Among social networking sites, MySpace received 76% of U.S. traffic in the week ended 20th October 2007, compared to 15% for Facebook.

According to press reports, Facebook is expecting to earn a profit of $30 million (£15 million) on $150 million (£75 million) in sales this year. So if it were a publicly traded company, it would be valued at a whopping 500 times earnings. Google, no slouch when it comes to market value, is currently trading at about 53 times earnings. CEO of Facebook, Mark Zuckerberg, 23, said that he wants to take Facebook public at some point. (source: Google News)

In the search to expand further, low cost airline Easyjet, has finally expanded by buying UK carrier GB Airways for £103.5 million ($212 million). GB Airways currently operates services under the British Airways brand to Southern Europe and North Africa under a franchise agreement (coming to an end March 2008) with British Airways, with services flying from Gatwick, Heathrow and Manchester. The purchase will however not include the Heathrow take-off and landing slots.

GB Airways operates a total of 39 routes - 28 from Gatwick, six from Manchester and five from Heathrow - and has a fleet of 15 Airbus aircraft. Easyjet said the deal was consistent with its expansion strategy and would improve its position at Gatwick. "This is an acquisition which both strengthens our customer offering at London Gatwick, our biggest base with an attractive catchment area, and allows us to fully capitalise on the potential of the airport through a larger number of slots," said Easyjet chief executive Andy Harrison.

GB's chief executive Kevin Hatton said the deal brought "an end to a period of uncertainty" about the future direction of the airline. We will fulfil our outstanding obligation as a franchise partner to British Airways and then look forward to a smooth operational merger with Easyjet" (source: BBC News)

Carphone Warehouse will partner with Vodafone and launch a new mobile phone service, which will run through Vodafone's network. This new service will be called, Talkmobile, and will run alongside Carphone Warehouse’s existing services, Fresh and TalkTalk Mobile, which operate through T-Mobile's network.

The deal with Vodafone comes as a surprise, as a year ago Vodafone said Carphone Warehouse would no longer be able to sell its mobile phone contracts. Carphone Warehouse shares rose 3.6% after Vodafone said that Carephone Warehouse will no longer be able to sell contracts in a year’s time.

Talkmobile will be a pay monthly service based around a nine-month contract. It will operate by renting excess network capacity from Vodafone, the same as Fresh and TalkTalk Mobile do through T-Mobile. Virgin Mobile has a similar arrangement with T-Mobile, and such services are known as mobile virtual network operators or MVNOs. Carphone is the UK's largest mobile phone retailer. (source: BBC News)

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