This is like the .Com era.
MySpace worth $15 billion in three years: analyst
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By Ben Charny, MarketWatch
Last Update: 3:09 PM ET Sep 27, 2006
SAN FRANCISCO (MarketWatch) -- News Corp. may have made the deal of the decade when it bought social-networking juggernaut MySpace for $580 million in July 2005, RBC Capital Markets analyst Jordan Rohan suggested Wednesday.
In a note to clients, 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.
For instance, Google Inc. (GOOG :
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GOOG402.74, -4.17, -1.0% ) has promised to pay News Corp. $900 million for the exclusive rights to provide search features and advertising on MySpace pages.
Yet just how much they are worth seems to change by the day. For example, Facebook, another popular social network that's got a smaller audience than MySpace, is reportedly in talks with Yahoo Inc. (YHOO :
Yahoo! Inc.
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YHOO24.72, -0.33, -1.3% ) to be purchased for $1 billion. Read more in Net Sense.
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3:03pm 09/27/2006
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NWS20.48, -0.10, -0.5% ) on Wednesday were trading down slightly to $20.58 a share. End of Story
Ben Charny is a MarketWatch reporter based in San Francisco. |
