A report from Reuters indicates that Viacom, Inc. (NYSE:VIA) Sumner Redstone is not bidding on Facebook, the highly popular social networking site.
True, Redstone admitted that it was a huge mistake to let MySpace go to News Corporation (NYSE:NWS). But, then again, this should not cloud good thinking on future deals.
Simply put, Redstone thinks the price tag on Facebook is at nose-bleed levels.
The rumor is that the price tag is about $1 billion – and that Yahoo! Inc. (NASDAQ:YHOO) is expressing interest in the deal, as well as Microsoft Corporation (NASDAQ:MSFT).
Actually, a recent piece from Wharton has a look at the valuation metrics for Facebook; with the realization that, at least for academics, it's pretty tough to come up with any sensible price tag for Facebook.
First, the company is in the early stages of a new market. Is it really a fad?
Besides, while Facebook has a big user base and strong brand, the fact remains that it is far behind the mammoth MySpace, which has more than 90 million active users and has attracted a $900 million deal from Google.
So what does Wharton think Facebook is worth? Like many academics, it was a bit fuzzy.
But, for those who need to make these kinds of decisions, Redstone thinks its definitely too expensive.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.
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