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Steve Ballmer had some choice words for doubters of Microsoft's Facebook purchase

Microsoft Corp. Chief Executive Steve Ballmer spoke with reporters on Monday at the sidelines of a business conference in Mumbai.  He countered the negative analyst reaction to the Microsoft Facebook relationship, reported by DailyTech last week, and satirized via a Binary Heroes installment.

Analysts say that Microsoft's $240 million dollar investment was a steep price to pay for what it was getting in terms of advertisement space, and was a big gamble based on hopes that Facebook will further evolve beyond just a social networking tool into something more.

Steve Ballmer countered these criticisms, stating, "We didn't make a mistake.  The valuation of Facebook is still to be determined. Certainly today, it's very, very popular. So for a company like ours that wants to be a pre-eminent presence in this space, it's very important for us.  Will Facebook be worth $5 billion, $15 billion or $50 billion some years down the line is really up to their team and how they take it forward."

What Ballmer failed to acknowledge is that whether Facebook is worth $5 billion USD or $50 billion USD down the road does have a major impact on the returns Microsoft can hope to get on its investment.

Ballmer, who shares a penchant for controversial statements with Apple CEO Steve Jobs, has been a major voice at Microsoft ever since he joined the company at request of Harvard classmate and best bud Bill Gates.  Ballmer recently waxed on his relationship with Bill in a piece on DailyTech, in which he compares his relations to Bill to a marriage -- one that has produced many, many children.

During his encounter with the press on Monday, Ballmer was also questioned about rumors that Microsoft might acquire Yahoo in hopes of mounting an offensive against Google in terms of advertising and internet search capabilities. 

This speculation follows recent development that Google is continuing to dominate the web with preparations nearly complete on a GMail 2.0 rollout and IMAP support now implemented for GMail.  It also follows the news breaking announcement from Google that it will be rolling out its new open-source mobile OS dubbed "Android OS" in mid 2008 in direct competition with Symbian OS and the less widespread Windows Mobile OS.

Microsoft's next move against Google remains a mystery though, as Ballmer remained mum on the Yahoo rumors, saying only, "My answer is a considered 'no comment'."  However, Ballmer could not help but go on and give a bit of a comment saying, "We want to succeed in the online advertising space. What happens with Yahoo, we'll all have to wait and see."

Ballmer is visiting China today and discussed how important the Chinese market is to Microsoft.  He said that China is closely cooperating with Microsoft in dealing with its concerns about intellectual property (IP) rights.

More than a fifth of computers running on Microsoft software are running on pirated copies, with piracy particularly rampant in China.  Microsoft is hoping that recent crackdowns will help to boost legitimate sales in China.  In July an FBI and Chinese government probe netted over 500 million USD in stolen software, most of which was Microsoft and Symantec products.

Ballmer had mixed remarks on China.  He said, "We've made some progress, and there's better respect for software intellectual property there than there was three years ago.  That said, it's still lower than in a lot of other countries. So depending on how you look at it, life's getting better, or life's bleak."

Ballmer's remarks come following Microsoft best business quarter since 1999.  However despite record setting Halo sales, the giant has had some stumbles this quarter too.  Game retailers Gamestop and EB Games ended their XBOX 360 replacement plan, to cut losses occurred by frequent warranties which included the dreaded "red ring of death" (RROD).  Also, Microsoft's new Unified Communications initiatives have been criticized due to its insistence on proprietary standards.  In addition, Microsoft is facing rejuvenated Apple Leopard OS sales, as reported by DailyTech.

Still despite these obstacles, Microsoft has continued on throughout this year with bullish success, and will likely continue to do so for the foreseeable future.

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Chump change.
By Alias1431 on 11/5/2007 5:26:55 PM , Rating: 2
$240 USD is not a drop in the bucket for a company like Microsoft. Plus they got to beat Google this time. Hell that's probably why they did it.

RE: Chump change.
By Cygni on 11/5/2007 5:47:29 PM , Rating: 2
The thought of Google merging its leading internet search, keyword advertising, email, online document, blogging (blogspot), and videos (youtube) with the fastest growing social networking site must have been a scary thought for Microsoft.

Even if Microsoft did pay up the $240 million just to keep it out of Googles hands, it may prove to be a very wise move.

RE: Chump change.
By daftrok on 11/6/2007 12:35:21 AM , Rating: 2
But think of how much cooler Facebook would have been if Google bought. Remember how much better YouTube got with Google working behind it?

RE: Chump change.
By JSK on 11/6/2007 12:48:18 AM , Rating: 2
cool as in removing videos by the masses, content falling to valid and bs DMCA notices, endless.... endless spam...

Ya, Ill take my old youtube thanks.

RE: Chump change.
By animedude on 11/7/2007 12:45:45 AM , Rating: 2
The filtering will come sooner or later whether Google bought Youtube or not.

RE: Chump change.
By Vile2600 on 11/6/2007 1:35:13 PM , Rating: 2
But think of how much cooler Facebook would have been if Google bought. Remember how much better YouTube got with Google working behind it?

They have had their own version for quite some time now and it hasn't been working out too well.

Google's version is Orkut:

RE: Chump change.
By Hase0 on 11/7/2007 12:18:14 PM , Rating: 2
It's suppose to be fairly popular in other countries outside of north America

RE: Chump change.
By bespoke on 11/5/2007 6:01:00 PM , Rating: 2
As of June 30th, 2007, Microsoft had $23.4 billion (yes, billion, with a 'b') in cash and short term investments.

So they took 1/100th of their petty cash and stuck a valuation on Facebook that no sane company would pay.

RE: Chump change.
By Zurtex on 11/5/2007 8:46:51 PM , Rating: 2
It's not a validation of how trivial or how logical a move it was. It was a validation of how wise of an investment it was to their investors. 1% of their cash on hand might not sound like a lot, but the Facebook deal needs to show returns, their investors certainly wouldn't be happy if Microsoft did this for every site that Google eyed up, Microsoft would quickly run out of more money than their investors would tolerate.

RE: Chump change.
By P4blo on 11/6/2007 5:16:00 AM , Rating: 2
Well at least they're having fun with our money! Cuz that's what counts...

If Google won the bid.....
By danz32 on 11/5/2007 5:05:42 PM , Rating: 4
Do you think the reaction would be the same if Google had beat Microsoft and won the Facebook advertising? I'm not so sure it would be

RE: If Google won the bid.....
By therealnickdanger on 11/5/2007 5:28:34 PM , Rating: 4
Right. Google is the e-savior to the masses whereas M$ is the evil corporation that wants to drink the blood of the poor.

It will be interesting to see Microsoft tries to merge FB with its own "Spaces" social networking site - which has been around for years.

RE: If Google won the bid.....
By Alias1431 on 11/5/2007 5:45:31 PM , Rating: 2
They might have done better to put that 240 million into advertising for a site no one has heard about.

(It's true, it exists!)

RE: If Google won the bid.....
By arazok on 11/5/2007 6:43:30 PM , Rating: 2
With a URL like that, I'm amazed it's not more popular.

RE: If Google won the bid.....
By JCheng on 11/6/2007 3:12:31 AM , Rating: 4
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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