Andrew Ross Sorkin on the Value of Facebook
Andrew Ross Sorkin is The New York Times’s chief mergers and acquisitions reporter and a columnist. He is also the author of the 2009 book, "Too Big To Fail." Mr. Sorkin, a leading voice about Wall Street and corporate America, is also the editor of DealBook, an online daily financial report he started in 2001. In addition, Mr. Sorkin is an assistant editor of business and finance news, helping guide and shape the paper’s coverage.Mr. Sorkin, who has appeared on NBC's “Today” show and on “Charlie Rose” on PBS, is a frequent guest host of CNBC’s “Squawk Box.” He won a Gerald Loeb Award, the highest honor in business journalism, in 2004 for breaking news. He also won a Society of American Business Editors and Writers Award for breaking news in 2005 and again in 2006. In 2007, the World Economic Forum named him a Young Global Leader. Mr. Sorkin began writing for The Times in 1995 under unusual circumstances: he hadn’t yet graduated from high school. Mr. Sorkin lives in Manhattan.
Question: What is the real value of Facebook?
Andrew Ross Sorkin: Tough question. Probably not worth $15 billion on its face, obviously the valuation that Microsoft put on it by a dint of its investment, probably, almost a year ago now, would make it seemed like it's $15 billion. To really just understand that deal, the valuation looks like it's $15 billion but Microsoft was putting that money in on a very different valuation on its own head, which is, that it got an advertising partnership, an advertising deal with Face Book and more important, prevented Google from having that partnership. So that was worth a lot more to Microsoft than the $15 billion valuation.
You know, I don't know long term what the Face Book valuation will be. I suspect it might come in, in and around there but probably a little bit lower. And obviously the big question is, whether the kind of tribes of people who've been living and breathing and dying on Face Book are going to continue.
And there is some evidence that that's slowing and so what does that do to the valuation? And of course, you know, Ken Mark who runs the company, find a way to monetize this and actually have advertisers pay real money because the one thing that advertisers are so nervous and anxious about is, putting their ad next to a video of a kid from college throwing up after a long night and what is the value of that? So how you can marry advertising and all these pages and all of these different interests, is a real subject and a real subject by the way, not just for Face Book, but for all of these social networks.
Question: Is the data they have about their users where the value of Facebook lies?
Andrew Ross Sorkin: You would think that you would be able to put an enormous value. You know, the amount of information that Face Book has and knows about media and may know about you and knows about my buying habits and what I like and my interest and what I did last weekend, would seem like a very ripe, ripe information for advertisers, for marketers to get to you. The question is, how do they deliver that message? And I think that's what Face Book and all the social networks are struggling with right now.
Recorded on: June 3, 2008
The New York Times business reporter says $15 billion may be close.
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