Microsoft set to make at least $250M in Facebook IPO

People around the world will be focused on Facebook this morning as the social network offers its shares to the public for the first time. One company watching with particular interest will be Microsoft, which owns a 1.8 percent stake in Facebook based on a $240 million investment in 2007.

Microsoft owns 32.78 million shares of Facebook and plans to offer 6.5 million of those shares as part of the IPO, according to Facebook’s latest SEC filing. At $38 per share, that translates into about $250 million. The number could go up by about $37 million based on additional shares that Microsoft would offer if Facebook’s underwriters fully exercise their options to buy shares.

To put that in perspective, it amounts less than half of the $707 million in quarterly revenue Microsoft reported in its Online Services Division in the first quarter.

However, the real value in this investment has been the close ties it created between Microsoft and Facebook, as demonstrated by the Redmond company’s continued integration of Facebook into its Bing search engine. Just last week, Bing unveiled a new social sidebar that leans heavily on Facebook to help people find friends with expertise related to their searches.

Stay tuned for more on the Facebook IPO as it unfolds this morning.

Previously on GeekWire: Microsoft’s Facebook investment: Smartest deal Ballmer ever made?

  • Guest

    I love this strategy.

    According to my friend Victor, Facebook will be a $4 trillion market cap company by 2020. That would make Microsoft’s remaining stake worth more than $60 billion, or larger than Apple’s cash pile will be at the end of 2013 (now that its new CEO is foolishly giving it away to shareholders and Chinese Apple contractors). 

    I love this strategy. Thank you once again, Mark and Steve, for innovating.

    • Victor

      You’re as insightful as usual. MS had a FB-like program long before FB, but they never released it externally. So now instead of being the leader in social, one of the most strategically important trends in the industry, and making shareholders more than $100 billion just on the IPO, they instead have to ride FB’s coattails for a few hundred million profit after several years of investment, all of which and much much more has been lost on Bing, which is what the FB investment was all about in the first place. So deducting this $250 MM windfall from Bing’s losses gets you to what? “Only” $7.75 billion lost so far? Wow, that’s an impressive business model.

      MS: We spend the most on R&D but aren’t the leader in social, mobile, tablets, the cloud, or any other major trend that has transpired over the past decade plus. Not. A. Single. One. But sometimes we find a way to get a few of the crumbs left by others who did.

      I love our strategy. The board loves our strategy. Who needs stock price appreciation anyway?

      -Steve Ballmer

      • Guest

        Victor,

        You can’t make an omelette without breaking some eggs. Past losses are no guarantee of future failure. Celebrate present success and don’t mope about what happened years ago.

        I like a strategy that makes companies money. The board likes that strategy, too.

        Victor, I don’t understand nor do I endorse your pessimism. When a man gets in a car, do you shout, “You’re probably going to crash!” because you heard a man crashed a car once before? I know I don’t, which makes me a happy and prosperous man.

        • Guest

          Similar, if you’re serially incapable of delivering an omelette despite breaking more eggs than everyone else combined, it’s time to hire a new chef or rethink cooking as a vocation.

  • Dmiller68

    Try a Billion dollars per the MSNBC article I read today. At $40 a share. It closed at $38 so I guess a little under that.

    • http://geekwire.com Todd Bishop

      I don’t believe that’s correct. That’s not what the prospectus shows. 

      They may have been including the $550M that Facebook is paying Microsoft for the former AOL patents.

       Do you have a link to the article? I can’t seem to find it.

      • Bob

        — Microsoft Corp.
        Year invested in Facebook: 2007
        Amount invested: $240 million
        Number of shares sold: 6.6 million
        Value: $249 million
        Number of shares still owned: 26.2 million

  • Bob

    It’s ironic that the one investment Ballmer made which wasn’t really meant to be one per se, but rather to assist another (Bing), turned out to not only be profitable (unlike the majority of his others), but one of the most profitable. Of course, all of that and more will be lost on Bing and shareholders will never benefit from it directly. Still, it makes you wonder if Ballmer’s best path might be to take the billions he’s blowing internally and instead make a bunch of smaller bets on external entities who can actually execute and succeed.