Tech Crunch asks if MySpace is worth $12B, my answer to the question is no, MySpace is not worth $12B!
If FIM is on pace to generate $500M in revenues this year, then at a rich 10 times revenue, FIM would be worth $5B, no?
In fact, no.
Doubleclick fetched 10 times revenue from Google; YHOO and GOOG are trading at 10-15 times sales, but as display and search advertising leaders respectively, they deserve a slight edge in multiples. MySpace, FIM, Scout et al. don’t really exert any leadership in monetization categories. Don’t get me wrong: MySpace is the leader of unsellable impressions, IGN in the gaming community and Scout is a noble sporting site, but to merit sales multiples of 10 and more is pushing it.
P/E you ask? Well, IGN lost money, so did MySpace. FIM while valiantly gunning for $500M in revenues is hitherto not profitable.
In fact, I’ve got some bad news for Rupert Murdoch: if Google pays $25M per month to FIM - or $300M per year - and MySpace/FIM is suddenly owned by Yahoo!, what would that do to Google’s $900M deal?
Would Yahoo! honor it, or would it trump Google’s AdSense for its own ads.
Yahoo! makes $0.04 revenue per click compared to Google’s $0.11 RPC, so that $900M deal would yield far less, if MySpace/FIM was in Yahoo!’s hands. As such, that $500M yearly revenue figure would also slide quite a bit lower.
I don’t think by the way that $300M of the $500M figure comes from Google, by the way. That would mean that all of FIM’s revenue aside from the Google deal nets them $200M, which is extremely low. Something is awry there… I think.
I’d love to learn what drove Murdoch to place a $6B value last year, when UBS pegged its value at $2B.
And, that’s for all of FIM, not even MySpace alone.
Disclaimer: I used to be part of FIM from May - Dec. 2005. I miss those days. Where’s Borat to throw in a “not.”
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