December 16th, 2006
MySpace + Facebook = $14 billion?
Is it irresponsible of CEOs of public corporations to tout seemingly unattainable valuations of corporate properties? Are corporate Directors harming the companies they advise by publicly declaring outsized self-valuations?
Facebook board member Peter Thiel said last week: “The site's college-aged users make it worth $8 billion or more, as much as Viacom Inc.'s MTV music video channel," according to Bloomberg reports.
Rupert Murdoch, Chairman and Chief Executive Officer, News Corp., touted a $6 billion MySpace “flip” price tag to shareholders in Australia last month (see “$6 billion MySpace: Will this Levinsohn cash in?”), a year after acquiring the Web property for $580 million.
As a privately-held company, Facebook is not bound by all of the strict SEC and Sarbanes-Oxley disclosure requirements that publicly traded News Corp. must adhere to.
In “News on Digg acquisition? How about MySpace?” I dissect Murdoch’s claim that the MySpace multi-year outsourced search deal with Google “more than pays for the MySpace acquisition.”
Rather than the touted “landmark agreement,” I characterize the MySpace search services agreement with Google as a normal course of business change of vendor decision and ask: “Have News Corporation shareholders been mislead?”
Thiel does not risk misleading public shareholders by waving multi-billion dollar valuation wishes, but he does risk tarnishing his credibility and that of the company he serves.
TAKE THE POLL: Facebook: Sale, or no sale?
ALSO: Exclusive: Glam.com Samir Arora on new media valuations
