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Net Net: Promoting innovation and managing change

Facebook Valuation: Joe Weisenthal vs. John Carney


This morning I chatted about Facebook over IM with Business Insider’s Joe Weisenthal. (We were on Google’s g-chat, rather than Faceook messaging, if you want to know.)

In an odd, Freaky-Friday like change-up, I was bullish and he was bearish.

Carney: I just wrote a post explaining that Zuckerberg never has to pay taxes again if he doesn't want to.

Weisenthal: nice

Carney: It's actually really simple. Just borrow what you need to spend. Say $2M a year, over 60 years, plus compounded interest = $520M.

Which seems like a lot of debt but it isn't if you are worth $25B

Weisenthal: yeah, that's true

Carney: It's actually slightly advantageous to die with that kind of debt, since you can write it off against your net worth when you die.

Reducing the estate tax.

BTW, I’m pretty psyched that KE is coming over to CNBC.

Weisenthal: That is really cool about Kelly Evans

Carney: Back to Facebook. You know, I'm not sure people are reading Facebook right. The pessimists, I mean.

People are all citing a slowdown in growth last year. But last year was a terrible year. The world was teetering on the edge of chaos. Of course 2011 was slower than TARP, ZIRP, QE induced euphoria of 2009-2010. S&P grew 23 percent in 2009, and 12 percent in 2010. And ended flat in 2011.

Weisenthal: I don't know though. Facebook shouldn't already be in a place where it's that effected by macro stuff like that. Apple had a great year. Amazon had a monster year of growth. And Facebook is way younger. And if they are, then they're not a young company deserving such a huge valuation.

Carney: Fair point. I think they are more global macro exposed. And on valuation, I guess it depends on whether you think they can get out of Global Macro--basically ad sales. Google had a pretty rough year.

Weisenthal: That's true, but Facebook's revenue is still only $3 billion. That's less than a quarter's worth of profits for Google.

Carney: That can be looked at in two ways, however. Google revenues are potential Facebook revenues. It’s the zero-sum war for ad dollars.

Weisenthal: I totally agree. I think the potential for Facebook is enormous but at this point, it's not about growing users, so much as it is finding a way to monetize users much more aggressively.

Carney: Right. Amazon and Apple did well because they weren't second-derivative (fancy phrase for ad sales) dependent. Actually selling stuff. Facebook needs to diversify income stream and capture market share from Google on ads. This is why Kayla thinks Facebook might buy something like E-bay . And why I think we'll have a Facebook mobile OS in a few years.

Carney: Hey, if it's cool with you, I'm going to publish this.

Weisenthal: our IM?

Carney: Yeah

Weisenthal: Awesome.

Carney: Any closing thoughts? I'll give you the last word.

Weisenthal: Yeah, so basically I think people assume that Facebook will eventually hit on another cash cow. But people have said that about Google, and it's obviously really tough, even with such a gigantic user-base.

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