No comment:
In a note to clients, RBC Analyst Jordan Rohan said that he now believes MySpace’s worth as a company will increase tenfold to somewhere around $15 billion by 2009, given the value attributed recently to smaller social-networking sites, MySpace’s “massive” international appeal and its ability to inexpensively meet the surging demand for its features.
“The trajectory for profitability of MySpace is every bit as steep as that of Google,” the search giant that generated about $6.1 billion in revenues last year, the analyst wrote Wednesday.
That’s not bad for a company that at the time of its purchase was barely generating a profit, and three years later is still wrestling with the ways in which it will make money.
“Ridicule is part of the job description of a sell-side analyst, particularly when he is more bullish about a business model than even the management team of a hot Internet property,” according to Rohan. “We are acutely aware that some media investors will try to punch holes in our thought pattern, or at the very least, disagree with our valuation.”
Aside from going out on a giant limb, Rohan’s valuation also spotlights the struggle financial analysts and Internet executives now have putting a price tag on companies like News Corp.’s MySpace — where users create and manage their own Web sites, instantly communicate with each other and share music or other kinds of media.
With audiences of hundreds of millions of people, MySpace, Facebook and other social-networking sites have become red-hot commodities. They are generating lots of interest from larger companies hoping to either buy them or partner with them to serve up ads on their pages, or in the case of digital-entertainment providers to sell their content to their users.
Read more.
Subscribe:
October 22nd, 2006 at 10:33 pm
[…] What’s more, Google currently makes 99.9% of its revenues from paid search. So this all assumes that paid search continues to grow. Of course, paid search is growing, as are other areas of online advertising. Just this past month, Morgan Stanley’s Mary Meeker came out and boasted that the US online ad market would be a $32 billion one by 2010, upping eMarketer’s $25 billion estimate. Mind you, both eMarketer and Mary Meeker have a lot to gain by pumping these numbers, that’s how the system works. And admittedly, I am certainly not drinking the Google koolaid and implying that Google will be making $32 billion in revenues by 2010 or that it will be worth more than Microsoft in 2010, I am trying to show that numbers can be played with. When I’m not writing on this site, I’m busy building a company where interested parties ask me to define the market we’re going after, formulate a valuation for our company and what not, I do it as a fun exercise but am the first one to show how laughable such models are… just as crazy as RBC’s Jordan Rohan to come out and say that MySpace could be worth $15 billion in a few years. The problem is that he’s paid to come up with such models, I’m not. Point is: if Myspace and its social sexual predators can be worth $15 billion, heck, why can’t Google be worth more than MSFT? I’ve argued that Google is well on its way to become the Standard Oil or MSFT-esque monopoly of the 21st Century. […]