Microsoft buys a share of Facebook

After losing umpteen battles to the online giant, google, Microsoft have finally hit one. The big one. Microsoft has bought a share in facebook at $240 million. That’s 1.6% of a website whose transaction was valued at $15 billion. The valuation for Facebook makes the $580 million News Corp paid for MySpace look like blatant cheating.

$240 million for 1.6% of a networking site??? You might be tempted to think that the biz gurus at MS have finally gone bonkers. But the industry says otherwise. Facebook is currently the 2nd biggest social networking site next to MySpace. According to press reports, Facebook is expecting to earn a profit of $30 million on $150 million in sales this year. The deal gives MS control over banner ads on Facebook outside the U.S., where about 60% of Facebook's 49 million active users reside.

The deal brings to forte the rising necessity for software giants to lap up websites and have a foothold over the web. Google started it by taking over blogspot, orkut, youtube. Sites that are prime hotspots of social networking and currently generate the maximum internet traffic.

All said, the deal works fine for both. A win-win situation. Facebook earns a BIG rise in valuation and MS gets a nice foothold on the web to make its presence known.