Microsoft takes a stake in Facebook

OK - it’s official. After weeks (months?) of speculation, Microsoft and Facebook today announced a deal in which Microsoft has taken a 2% stake in Facebook for a cool $240 million. Doing the math suggests a current valuation for the social network enfant terrible of $15 billion (far saner I suppose than the $50-60 billion numbers being tossed around in the recent past). The deal opens up additional ad sales opportunities for the Microsoft ad sales team in international Facebook properties which are now (or about) come online.

Here’s the official release copy:

Facebook and Microsoft Expand Strategic Alliance

Microsoft to take equity stake in Facebook; companies expand advertising deal to cover international markets.

PALO ALTO, Calif., and REDMOND, Wash. — Oct. 24, 2007 — FacebookÒ and Microsoft Corp. today announced that Microsoft will take a $240 million equity stake in Facebook’s next round of financing at a $15 billion valuation, and the companies will expand their existing advertising partnership. Under the expanded strategic alliance, Microsoft will be the exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States. Financial terms were not disclosed.

“We are pleased to take our Microsoft partnership to the next level,” said Owen Van Natta, vice president of operations and chief revenue officer at Facebook. “We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to the more than 49 million active users of Facebook.”

“Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world, and is a great win for not only for our two companies, but also our collective users and advertisers,” said Kevin Johnson, president of the Platforms & Services Division at Microsoft. “We have partnered well over the past year and look forward to doing some exciting things together in the future. The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership.”

Facebook continues to experience strong growth both in the U.S. and international markets; 59 percent of Facebook’s users are outside the U.S. With an average of 250,000 new users registering each day, Facebook continues to be one of the most-trafficked sites on the Internet.

On Aug. 22, 2006, the companies announced a U.S.-only strategic alliance that named Microsoft the exclusive provider of standard banner advertising on Facebook using Microsoft’s digital advertising solutions and the Microsoft® adCenter platform. In early 2007, the terms were extended to 2011.

As you might imagine, the tubes are all abuzz with prognostication, speculation, and unabashed WAG-ing (it’s an acronym - let me knowif you need help with that). Bottom line from my perspective? A smart move by Microsoft, a setback for Google, and a big validation for Facebook.