Facebook: $750 million or $2 Billion

A few days ago there was a lot of chatter over Business Week story that Facebook was on the block, as long as the buyer was ready to pony up $2 billion.
I suggested that the founders of the company should have been prudent and taken the rumored $750 million offer. My argument was that since their traffic was starting to dip, why not follow the philosophy – a bird in hand is worth two in the bush. It was no reflection of the possibilities of the network, or how much money the network could make in the future. Hell if I didn’t think they had a good thing going, I would have never written about them in the first place.
It was just looking at the Alexa traffic rankings. Michael Arrington and Matt Marshall, both took issue with me for using the Alexa Stats, because they thought Alexa stats were unreliable. Fair point, though I see people quote Alexa stats all the time. Nevertheless, I thought, well since they are arguing against the Alexa data, why not use a more reliable data, such as Comscore/Media Metrix. After all that was the information used by Business Week. (Matt should have also linked to this comment in order to complete the picture, but never mind.)

So what did the Comscore/MediaMetrix data reveal? From December 2005 to February 2005, MySpace added 5 million unique visitors while, Facebook’s unique visitors declines by about 2 million – or about 16%. And this is before spring break or March Madness. Ironically the data dovetails with the trends on Alexa as well. And given that I am lowly journalist with little check-cutting experience, the $2 billion price tag seemed crazy to man known to cut big checks.

Ross Levinsohn, the bought MySpace for News Corp told a gathering of investment bankers in NY: “We’re certainly not paying $2 billion for Facebook. If the price was right I’d be interested in it. It’s a great site and I know the guys there well.” Anyway Paul Kedrosky says it well, when he so pithily writes, “If paying four times as much for a smaller, slower-growing site whose main users leave in lock-step graduating cohorts every year isn’t mad, then I have no idea any more what is.” Meanwhile, I have heard from the sources, what Business Logs, had reported earlier his week: Facebook in a month or so will open its network to non-college students, and Linked-In type features.