Facebook Worth $1 Billion? By: Jason Hahn - Topic: Merger and Aquisitions - Date: September 22, 2006

Yahoo's recently revealed courting of Facebook has been creating a lot of buzz lately.  The $1 billion question is now whether or not this would be a good move for either party.

For Yahoo the answer seems to be a fairly strong "yes."  Most analysts agree that $1 billion is a reasonable price for Facebook, given Google's recent $900 million deal with MySpace just to provide advertising.  The deal would also give Yahoo a young audience to reach with its Web 2.0 products, and given the fact that they have indicated that Web 2.0 is the direction they want to focus on, this would seem to be a key for Yahoo.

"As Yahoo releases new Web 2.0 applications, that's a great audience to introduce new products into. They tend to be early adopters," said Needham & Co. analyst Mark May.

For Facebook the answer is a bit less certain.  Founder Marc Zuckerberg has expressed respect for Google and Apple, whose minimalism has influenced the way he created Facebook.  Given the fact that Yahoo does not exhibit nearly as much of a minimalist culture in its products and sites, Zuckerberg might be a bit apprehensive and feel a bit hypocritical if he sold his baby to them.

Now if Google offered $1 billion, the matter could take on a whole new face.  But that's a big "if," and just a thought for entertainment, for the time being.

Also, back when Viacom offered $750 million for Facebook at the beginning of this year, reports indicated that Zuckerberg requested $2 billion for his company.  So, Yahoo's offer, though large, might not be enough to satisfy Zuckerberg.

But, a reason for Zuckerberg to really consider Yahoo's offer might be the sensitivity of his members' tastes in terms of exclusivity and privacy.  With Facebook looking to open up its doors to anyone around the world in the very near future, the response from its current members might sway the site's power and value greatly.  To put it bluntly, Zuckerberg might consider selling while things are still at a strong high point for Facebook, and to avoid any loss of value that future changes might bring.

Of course, if the opening up of Facebook goes well, its current member base could jump a significant amount, which means a broader and bigger audience to deliver ads to.

Will Zuckerberg actually accept Yahoo's wooing this time around?  Probably not.

But don't be surprised if Facebook strikes a more lucrative deal in the future.

Read more about the offer here, here, and here.