4 ms·

Very cool news. However, I see something like this and I wonder: "wow, Facebook is valued at over 10 times this purchase price (which is already inflated by vi

by ihodes 16y ago

Very cool news. However, I see something like this and I wonder: "wow, Facebook is valued at over 10 times this purchase price (which is already inflated by virtue of it being a purchasing price)." I don't know what to draw from that; intuitively I see less value in Facebook, but I certainly haven't done an in-depth analysis.

spitfire 16y ago
Nat semi has a known value and track record. Facebook doesn't have a known value/track record. Same with all these doctoms that give away things for free. The second they start charging they put a cap on their value. With facebook you're paying for future potential. That's the reasoning, whether you agree with it or not.
- ihodes 16y ago
  I do understand that argument; that much is clear (and I was not!). However, I think one would have to be dishonest with oneself if one didn't think the valuation was overinflated.
  - spitfire 16y ago
    Agreed. But silicon valley seems to have its own reality distortion field around it.
- mlinsey 16y ago
  Your post seems to be implying that Facebook hasn't found a business model, and that a day of reckoning will come "the second they start charging". However, Facebook is already charging for advertisements, that's how they earned about $355 million in profits in the first 3/4 of 2010: http://nymag.com/daily/intel/2011/01/goldmans_leaked_details_on_fac.html http://nymag.com/daily/intel/2011/01/goldmans_leaked_details... In contrast, National Semiconductor earned about $220 million in profits for approximately the same period: http://www.google.com/finance?client=ob&q=NYSE:NSM http://www.google.com/finance?client=ob&q=NYSE:NSM (not exactly the same months, because their Q1 goes from Dec-Feb, but still a useful point of comparison) One can make the case that Facebook is overvalued, perhaps even grossly overvalued, but to say that it should be valued at less than National Semiconductor is a big stretch, even if you are very conservative and use only current bottom-line financials. In my experience, those who make such statements are not basing their opinion on fundamentals of the companies, but on an opinion that companies like National Semiconductor do "real" engineering as opposed to "frivolous" social networking sites like Facebook. It's discouraging to see such attitudes, but they are not new: both early internet companies (including ones that survived the bubble and turned out to be sound companies) as well as early PC-era companies were also derided as toys or fads.
  - alain94040 16y ago
    Exactly. I have no doubt that Facebook's profits could easily triple in the next two years. For National Semi, I wouldn't bet on it :-) So yes, a somewhat larger valuation for Facebook than National sounds reasonable. So, $6B -> $15B, $20B.
philthy 16y ago
I would say that it is definitely a power or over buy. I would agree that the purchasing price could be a good bit lower. Now I'm not trying to demean Nat in anyway they are in no way a garage operation, but they have not been doing that well in the past few years. I don't know if it is a downturn in markets or competition but their stock price isn't where it was 5 years ago. http://www.google.com/finance?q=National+Semiconductor&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-8&sa=N&hl=en&tab=we http://www.google.com/finance?q=National+Semiconductor&o... But it sure as hell will be tomorrow look at that after hours!

by ihodes 16y ago

spitfire 16y ago

Nat semi has a known value and track record. Facebook doesn't have a known value/track record. Same with all these doctoms that give away things for free. The second they start charging they put a cap on their value. With facebook you're paying for future potential. That's the reasoning, whether you agree with it or not.

ihodes 16y ago
I do understand that argument; that much is clear (and I was not!). However, I think one would have to be dishonest with oneself if one didn't think the valuation was overinflated.
- spitfire 16y ago
  Agreed. But silicon valley seems to have its own reality distortion field around it.
mlinsey 16y ago
Your post seems to be implying that Facebook hasn't found a business model, and that a day of reckoning will come "the second they start charging". However, Facebook is already charging for advertisements, that's how they earned about $355 million in profits in the first 3/4 of 2010: http://nymag.com/daily/intel/2011/01/goldmans_leaked_details_on_fac.html http://nymag.com/daily/intel/2011/01/goldmans_leaked_details... In contrast, National Semiconductor earned about $220 million in profits for approximately the same period: http://www.google.com/finance?client=ob&q=NYSE:NSM http://www.google.com/finance?client=ob&q=NYSE:NSM (not exactly the same months, because their Q1 goes from Dec-Feb, but still a useful point of comparison) One can make the case that Facebook is overvalued, perhaps even grossly overvalued, but to say that it should be valued at less than National Semiconductor is a big stretch, even if you are very conservative and use only current bottom-line financials. In my experience, those who make such statements are not basing their opinion on fundamentals of the companies, but on an opinion that companies like National Semiconductor do "real" engineering as opposed to "frivolous" social networking sites like Facebook. It's discouraging to see such attitudes, but they are not new: both early internet companies (including ones that survived the bubble and turned out to be sound companies) as well as early PC-era companies were also derided as toys or fads.
- alain94040 16y ago
  Exactly. I have no doubt that Facebook's profits could easily triple in the next two years. For National Semi, I wouldn't bet on it :-) So yes, a somewhat larger valuation for Facebook than National sounds reasonable. So, $6B -> $15B, $20B.

philthy 16y ago

I would say that it is definitely a power or over buy. I would agree that the purchasing price could be a good bit lower. Now I'm not trying to demean Nat in anyway they are in no way a garage operation, but they have not been doing that well in the past few years. I don't know if it is a downturn in markets or competition but their stock price isn't where it was 5 years ago. http://www.google.com/finance?q=National+Semiconductor&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&um=1&ie=UTF-8&sa=N&hl=en&tab=we http://www.google.com/finance?q=National+Semiconductor&o... But it sure as hell will be tomorrow look at that after hours!