Facebook valuation 'shocker' another reason to be skeptical of media hype

Here's a message for all the tech bloggers and reporters freaking out over the alleged Associated Press bombshell that some copy-paste legerdemain led to the revelation that Facebook valued itself at $3.7 billion at the time of the ConnectU vs. Facebook court settlement:

Please, chill out! This is not news!

While it had not yet been reported that the ConnectU settlement was a reported $65 million (though since it was in cash and stock, that value may have dropped with the onset of the recession), the $3.7 billion Facebook valuation has been around since July.

The New York Times' Brad Stone broke the figure--well, $3.75 billion--amid the hullabaloo surrounding the redacted court transcripts. I know we're bloggers and we have the attention spans of goldfish and all, but the hype over this "shocker" is a bit silly.

Earlier this week, the AP had obtained court documents dating back to June, when ConnectU vs. Facebook was settled. The founders of ConnectU, former Harvard classmates of Facebook founder Mark Zuckerberg, had sued the eventual CEO because they alleged he stole their intellectual property when he was employed as a programmer for ConnectU. But the court documents were kept sealed, largely because there was information pertaining to the privately owned Facebook's valuation. Media outlets, among them CNET News, had lobbied to have the redacted documents made public. The AP eventually used a copy-paste function in an electronic version in order to expose the censored content. Oops.

ConnectU, meanwhile, has contested the settlement because its founders, who include identical twins and Olympic rowers Cameron and Tyler Winklevoss, claimed they were misled as to how much Facebook was worth.

Facebook's valuation has been the subject of scrutiny ever since Microsoft invested $240 million in the social network at a sky-high $15 billion valuation. But that investment was one of preferred stock, and it soon became clear that Facebook's paper valuation was significantly lower.

The AP story does have one new tidbit: Facebook was appraised at $8.88 per potential share as part of the $3.7 billion valuation. That figure obviously has dropped since then, given the impact of the recession.

Aside from that, this is a story that was reported almost eight months ago. Keep calm and carry on, folks. To my fellow members of the media, I'm sure there's a "cool new use for Twitter" story to be reported. We clearly can't get enough of those.

[tremorfireheart]

It's great that you went and brought attention to the person who originally brought this information to the public.

[zeboone]

This is indeed old news, thanks for pointing it out Caroline - seems to be the breaking news for the day for a lot of people. What a hilarious story, though! Good ol' copy/paste...

[kaizoman]

I appreciate the downplay of this story, most because it wasn't news the FIRST time. Facebook has so much personal data it's mind boggling. Information is worth a lot of money, particularly the kind that Facebook tracks. I'm surprised that they valued themselves so low.

[Zippy-T-Pinhead]

Regardless of when assertions as to the "Value" of Facebook were first made, "Valuation," in and of itself these days is pretty much smoke and mirrors and speculative, to say the least. Private Equity funds, banks and other financial players are all struggling with valuation models and procedures in a market that is awash with distressed assets. True, all you can do is try your best to attach a number with some rhyme or reason to a company's worth, but in this market it could be $3.7 bil or $15 bil - or somewhere in between - or nowhere near either. Your guess is as good as anyone's else - including the proverbial dart-throwing monkey...

[rje0929]

i read a story on <a href="http://www.msnbc.com">msnbc</a> about this. I think FB is way overvalued.

[JasonKincaid]

Caroline, I think you're usually spot-on with your skepticism, but this was a pretty significant story (maybe not because of the valuation of Facebook, which really wasn't surprising at all, but at least the details of the settlement are interesting). Give us bloggers a break, eh?

[joelmblatt]

Do I have to Facebook? Online Networking has reached epidemic proportions. I?m on Facebook for social networking, LinkedIn for business networking, and Sparkbliss for romantic networking. With Facebook, the proposition is join or seem aloof. Given its pervasive nature, forget about your privacy. When my friend Calvin asked if he should join Facebook, I put it this way ?it depends if you want to fill up your inbox and then allocate the time to respond.? I added ?expect everyone you have ever known from childhood to today to want to be friends and then ask you to join this, vote on this, attend this, play this, and so on.? He was deterred for now, but will succumb. Personally, I avoid being sucked into its online vortex.

Not the new Google - it has no extensible IP or even much intellect behind it. It's Palo-Alto Vacant.
I have no use for it and never will.

[Inconnux]

Facebook isn't worth 1/4 of that price