Saturday, October 27, 2007

Facebook IPO'd via Microsoft Bought Deal

Did Facebook just inadvertently IPO via Microsoft's tiny investment of a quarter of a billion dollars?  MSFT stock seems to indicate that people are investing more in Microsoft... perhaps not only because of the positive earnings statement but to get to Facebook's value? 

There are a near-infinite number of ways to look at these sorts of deals, but even as an investment with benefits, this is too much.

Source: Microsoft's Facebook deal makes no sense - MarketWatch

Maybe it isn't too much.  Microsoft's market cap is $328.42 billion today.  Since going from around $29.50/share at the beginning of October they have gained more than $50 billion dollars in market cap, or around 15%.

Could this be due to share buybacks from the company itself?  It was planning to spend more than $40 billion to thicken its heavily diluted stock.  

Is it odd that they announced the Facebook deal just before announcing earnings for the quarter?  Perhaps they got this Facebook stake for free now? 

Is this how to get $250 million for free?

1. Stock buyback already in the works
2. announce great earnings
3. Facebook deal
4. sell stock...

Well, it's not really for free, but I'm sure that by moving some money around they could make this look good on the balance sheet. 

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