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Economics of News Corp, MySpace and Google

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don

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Post Wed Aug 23, 2006 12:27 am

Economics of News Corp, MySpace and Google

Just thought this was interesting and deserved mentioning.

- Intermix Media, parent of MySpace, had a $140 market valuation 11 months ago.
- MySpace had revenues of $6.25 million in the second quarter.
- News Corp buys MySpace for $580 million.
- Google pays News Corp $900 million to replace Yahoo as the exclusive search engine of MySpace.
- Google's stock rose 2.6% on the news. Today the stock is worth $378.
- It's too soon to know numbers for AdSense / AdWords revenue, but millions of clickers has to be good for the bottom line.

Wow! Is this the second coming of 'irrational exuberance?'

- Intermix / MySpace clearly made a bundle.
- News Corp already has a profit of $320 million without even breaking a sweat. Not bad for a couple months work.
- Google is throwing around it's fortune from it's IPO to gain even more market share.

Since they all have made money already on the deals, it's just good business... right?

Add your thoughts.

Donald C. Donzal
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Last edited by don on Wed Aug 23, 2006 9:31 am, edited 1 time in total.
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jimbob

Post Wed Aug 23, 2006 5:10 am

Re: Economics of News Corp, MySpace and Google

I'm with irrational exuberance. These companies are making money and that seems to be the perceived holy grail of an Internet based business. Make a profit, any profit and you're a winner. Given the number of failed attempts to squeeze cash from the net a little sucess goes a long way and stock prices reflect this. Whether these companies are overvalued is another matter but it can't go on forever without things going bad.

Jim
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oleDB

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Post Wed Aug 23, 2006 12:15 pm

Re: Economics of News Corp, MySpace and Google

News Corp made a timely purchase and reaped a quick payout. Thats good business. I think Google in effect overpaid because it had to, otherwise somebody would have. I really think Goggle's adwords/adsense system has to go. Because I've used it for a year on some of my sites and stopped, I believe its a completely fraudently system. I would say 90% of your clicks are faked by extensions or scripts that beat google's fraud mechanisms. Also, it allows crackers to attack your site with fake clicks and get google to pull you from the program. I do however think that myspace is a transient thing. Yes its the number one site right now, but when a new site comes out with "web 3.0" technology or some new gimmick, it will take over, just like myspace did from other social networking sites like friendster.

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