Posts Tagged ‘Yahoo’

Facebook Is Worth $50 Billion? Anyone Remember the Dotcom Bubble?

Tuesday, July 12th, 2011

Could social media be the victim of the next dot.com bubble? Although Facebook has been valued at $50 billion – more than Yahoo!, eBay, and Time Warner and butting heads with such giants as Amazon and Google, there is some question about what the valuation is based on.  According to Newsweek, “Some media experts have compared Facebook with Disney, valued at about $70 billion.  But Disney has real, tangible assets – parks, hotels, cruise ships, iconic images to market on everything from T-shirts to tableware, and a massive library of classic animated films – to back its assessed value.  Facebook has a virtual network that, according to Time, links one-twelfth of the world’s population.  However, according to The Wall Street Journal, Facebook still has enormous infrastructure costs that include as much as $700 million for two data centers, and its profits have yet to be publicly disclosed.  When an investor buys a piece of Facebook, what exactly does that investor get?  The sudden, meteoric explosion in value of online social media sites like Facebook and Twitter is eerily reminiscent of the rise about 15 years ago of the online businesses that created the ‘dotcom bubble.’”

On the PBS Newshour,  Ray Suarez interviewed Josh Bernoff, a senior vice president of Forrester Research, who has written two books on social media.  According to Bernoff, “I certainly think that there’s no rational way to understand these valuations.  I want to be clear here.  Social is very exciting.  There’s a lot of business perspective, a lot of optimism that goes along with it.  But I think these valuations are based on where people think the next buyer will come from and not on where the actual revenues of these companies are going.”  Earlier this year, Microsoft bought Skype for $6.5 billion, although its revenues are less than $1 billion a year.  When LinkedIn went public, it was valued at $9 billion.  Its profits are just $12 million annually.

According to Experience:  The Blog “The dot-com crash of 2000 was devastating.  Even now, 11 years later, the NASDAQ Composite is just a hair over half of where it stood in March 2000.  The crash caused the loss of $5 trillion in market value, huge numbers of people lost their jobs, and the facade of most of those dot-com millionaires crumbled as their paper wealth evaporated.  (To me, the insanity of the dot-com craze is demonstrated by a single story told to me by a now-successful exec in a social enterprise company.  Back in 2000, he ran a tiny startup that got caught up in the dot-com hysteria; at one point it hit a market cap of $1 billion but was generating just $60,000 of revenue.)  I am taking you on this trip down Memory Lane for a reason:  It’s happening again.  Investors in social media startups are looking to cash in, and valuations are soaring despite modest to no profits.  Recently, Airbnb, a site that allows people to arrange short-term vacation rentals of rooms, homes and apartments, received a round of funding based on a $1 billion valuation.  While the company has not released financials, best guess estimates are that Airbnb only generates around $10 million of revenue.  To put this into perspective, Marriott has $12 billion in revenue and a market cap of $14 billion.”

The Next Web disagrees with predictions of a second dotcom bubble.  “Dotcom 2.0 is much stronger than its predecessor.  People are more technologically savvy and, crucially, broadband and smart phones are approaching ubiquity.  The world is switched-on, tuned-in and can’t get enough Internet.  Technological advances aside, the one thing that will ensure we don’t see another dotcom disaster is social media marketing.  The key to success this time lies in finding ways to monetize the many ventures – it’s understood that driving traffic isn’t enough, which is why Twitter is actively seeking ways to drive its revenue.  In fact, Twitter may make as much as $150 million this year, according to some reports.  There’s no question there are a lot of over-valued companies out there at the moment; some will undoubtedly crumble and some will flourish. But Dotcom 2.0 isn’t a bubble, and it won’t burst.”

Yahoo! Planning a New Corporate Home

Thursday, June 10th, 2010

 Yahoo wins approval for a new corporate campus in Santa Clara, CA.  Advance planning has put the heavily trafficked Internet destination and online media company Yahoo! in a sound position to develop a planned 3,000,000 SF campus in a high-profile location in Santa Clara, CA.  Yahoo! purchased the 48-acre site in 2006 – well before the financial crisis and increased competition from Google and Facebook.  Although no construction start date has been announced, Yahoo!’s plans have won the approval of the Santa Clara City Council, which certified the environmental impact report and the development agreement.

Currently based in Sunnyvale, CA, Yahoo! plans to develop 13 six-story office and R&D buildings; three two-story common buildings; and two levels of underground parking at the site.  When completed, the campus will accommodate as many as 12,000 employees.  According to Yahoo!, the development would consolidate its employees and facilities in a Silicon Valley region with “high corporate visibility”.  The development agreement gives Yahoo! the authority to build at the site for as long as 20 years.