Tony: The Fight For Facebook Gross Out Rights

There were two great victories for the Internet this week. One real and one imagined.

For starters we learned that taking a photo of a placenta won’t get you kicked out of nursing school

This is important because the right to be disgusting is part of the great freedom the Internet offers. Even better, Goldman Sachs investment in Facebook will lead to an IPO and inevitably the end of the hype involving the company that’s already being described as a ponzi scheme.

Again, this is good for the Internet. Let me, quickly, explain why:

Despite the claims of teenagers and marketers, Facebook is not the Internet. It’s just a really neat website. However, the misguided notion that a closed network can leverage its platform for ANY extended period of time is laughable.

The Internet is dangerously fickle and unless Facebook develops the ability to deliver sandwiches over wireless protocol or develop an orgasmatron application people will eventually move on; anybody remember AOL? Ironically, a $50 BILLION valuation means Facebook is worth more than Time Warner now too.

Don’t get me wrong. Facebook is no slouch.

"Facebook’s profit margins are right in line with Google’s. But Google currently trades at 25 times earnings. At $50 billion, Facebook is trading at a multiple of about 100 times earnings."

IF their books aren’t too cooked, a recent article on the Goldman Sachs investment notes: The social networking firm raked in $200 million in net income on $777 million in revenue in 2009.

The proclaimed profit margin of 25.7% is impressive but only ranks 25th among net profit margins in the S&P 500.

Here’s the money line: "Facebook’s profit margins are right in line with Google’s. But Google currently trades at 25 times earnings. At $50 billion, Facebook is trading at a multiple of about 100 times earnings."

In a word, the company is OVERVALUED. But it gets worse, the company isn’t like Google or Time Warner or any other big media operation that has revenue far more solid than mere advertising and customer marekting information. While I’m sure Facebook has an impressive bit of infrastructure it’s nothing that can’t be duplicated. Heck, even Vietnam has developed a Facebook clone to spy on its people.

Again, it’s all too similar to AOL, with high profile investors taking the bait instead of lame CEOS who know better by now. In the meantime, the fad is even more fun than the hulahoop, and for the users not much more expensive if the value of time isn’t factored in . . .

Even better, when this bubble bursts the next one is just around the digital corner.

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3 Responses to Tony: The Fight For Facebook Gross Out Rights

  1. Ptolemy says:

    Nice re-wording of the facts. Actually, the nurse WAS expelled for posting the pic of herself with the placenta on her Facebook page. That was the marketplace at work. She was free to post the picture and the university was free to expel her from its ranks. Judicial fiat is not part of the marketplace at work. Judicial legislation is what smarmy Liberals do when they are limp-dicked in the marketplace.

    Silly Liberal.

  2. bschloz says:

    A Little Toppy, No?
    Not exactly the hula hoop and not exactly GOOG…the GS investment and the Groupon offer has sparked .com mania again, everyone wants a piece of “Social Network”….all kinds of bullshit stocks are catching bids…OPEN…NFLX…TZOO……Facebook has market cap = to Boeing the Country’s largest exporter.

    This is shaping up to be a GOGO year it appears…..Obama is turning into Joe Wall Street…many Corporate tax incentives to follow…with unprecedented liquidity to the Squid…we are gonna repatriate our capital which will then turn into the the biggest M&A spree in history. Volatility is ridiculously low….. in the face of European Bond Market that is screaming out of control. Moral of the story : Its good to be able to print your own money. SPY < / > Giddy Up

  3. Joe says:

    Facebook . . encourager of mindless facebook games like farmville, mafia wars etc..and oh yea, they exposed personal information of millions of users to 3rd party groups %u201Caccidentally%u201D. Not to mention having pissed off their online community this year with his several bogus attempts at securing your online data.

    And who could imagine a piece of what is basically elementary level chat room software-code that probably wouldn’t even have made it into a freebee software bundle for a multi media product 14 years ago would be worth $50 Billion?

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