Microsoft to bless Facebook with a $10 billion valuation?

Over the past couple weeks, there's been lots of chatter that Facebook is seeking another round of capital. And, according to a recent report, the money might come from Microsoft (NASDAQ: MSFT).

Apparently, it looks like the software giant is angling to buy a 5% position in the super-popular social networking site. The amount would range from $300 million to $500 million, which could put a value of $10 billion on Facebook.

Of course, such things can be dicey. But, for Microsoft, the amount is chump change. Besides, Microsoft needs to show that it has some dot-com magic against rivals like MySpace, Yahoo (NASDAQ: YHOO) and Google (NASDAQ: GOOG).

In other words, an investment would be more than just making money – it would be an important strategic move. That is, Facebook may become a big adopter of Microsoft online technologies, such as its advertising platform.

Also, if Facebook is fetching such a nosebleed valuation, what could MySpace be worth? Maybe it's time for Murdoch to think about strategic alternatives with the website, such as a public offering?

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.