Tech giants poke around Facebook

Silicon Valley has asked a question about Facebook: Who will invest in — if not own — the wildly popular social-networking site?

Microsoft msft, Google goog and Yahoo yhoo are among the well-heeled suitors generating headlines about their interest in Facebook, a white-hot commodity that has quickly become a major force in social networking.

Millions of Americans joined Facebook Nation this summer to "poke" each other, share book favorites and pose questions to their online circle of friends about the latest Britney meltdown. Between Facebook and its rival, MySpace, it seemed the entire country was part of a social network.

And others noticed. Last week, there were reports that Microsoft is in preliminary talks with Facebook about a 5% stake — worth anywhere from $300 million to $500 million. Google is also reportedly interested in an investment. (Facebook, Microsoft and Google had no comment.) Last year, Yahoo and Viacom made bids to buy Facebook.

What's not to like?

Facebook's expanding user base of 43 million members includes the young, old and everyone in-between in the USA, industry analysts say. And it's poised to launch an advertising push that many tech analysts say could be as game-changing as the text-based ads that fueled Google's meteoric rise.

It's so hot that Facebook's cherubic CEO and co-founder, Mark Zuckerberg, 23, is in no hurry to sell any or all of his 3-year-old company. Many analysts speculate Facebook is girding for a blockbuster initial public offering in late 2008. The company is also mulling raising more than $100 million in cash for acquisitions and expanding its 300-person workforce, say financial analysts.

"If (Facebook) is not the Big Man on the Internet Campus yet, it's the handsome frat guy everyone wants to know," says Debra Aho Williamson, an online-advertising analyst at researcher eMarketer. "There is a feeling that Facebook may be onto something big: It takes Google's concept of targeted search advertising and goes multiple steps further" by delivering highly tailored ads to individuals and their network of friends.

By all measures, it's the Internet company of the moment, prompting some analysts to liken it to being the next Google. (To be fair, it has a ways to go to match Google's $10.6 billion in revenue last year.)

Facebook could be worth as much as $6 billion today, Bear Stearns bsc analyst Robert Peck says. He expects privately held Facebook to post a profit of about $30 million on revenue of $140 million this year, and register a $70 million profit on revenue of $358 million in 2008. He predicts $6 billion in revenue by 2016.

PayPal co-founder Peter Thiel, a Facebook board member and its first investor ($500,000), recently suggested the company is worth as much as $10 billion.

"Mark is not focused on selling quickly," Thiel has said. "Some people get nervous about the boom and the bust and maybe the boom again. Not him."

A prized possession

Even by the Valley's outsize expectations, Facebook is generating a loud buzz.

It has become the poster child for the power of social networks, personalized websites where individuals share their profiles and interests with friends and business associates. Social networks are used by two-thirds of the estimated 220 million online users in the USA, says Karsten Weide, an analyst at IDC. idc An estimated 200,000 new folks sign up for Facebook each day.

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