Facebook the Next Skype?

I never really thought I would be coming up with a completely original idea when I started writing this post, but to see a near-identical article posted on the famed Valleywag site just yesterday (when the idea for the post actually planted its seed) was a bit deflating. However, having read that article, I will chalk it up the same way writer Owen Thomas did when pointing to articles by Bernhard Warner and Kara Swisher: Great minds think alike. With the recent revelation that eBay paid too much for Skype (only by $1 billion dollars or so, by their estimates), it may cast a shadow of doubt on recent valutations of social networking site Facebook hovering around $10 billion. While there are arguments that the purchase of Skype may have been more profitable or advantageous for a company other than eBay, it’s difficult to make a similar argument with Facebook. Comparing it to other recent, similar acquisitions (YouTube and MySpace come to mind), the price seems significantly inflated. The MySpace team may have sold early, but could the price somewhere around 20 times the amount News Corp paid for MySpace and 10 times the amount Google paid for YouTube be realistic? Facebook has some legal issues that still need to be resolved and the site only seems to generate around $30 million in profit on $150 million in revenues (see Kara Swisher’s article).

I hope the best for the site and will follow the rumours of it’s inevitable sale, whether it is for a piece or the whole site. Hopefully this doesn’t become the next Skype, or worse, the next GeoCities.

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