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Facebook's $200M investment values co. at $10B

May 27, 2009|David Sarno

Facebook Inc. announced Tuesday that Russian venture capital firm Digital Sky Technologies has paid $200 million for a 2% stake in the Palo Alto social networking company.

The amount gives 5-year-old Facebook a total valuation of $10 billion, substantially lower than the $15-billion valuation it was given in 2007 when Microsoft Corp. paid $240 million for a 1.6% stake.

The Russian firm also said it would buy $100 million worth of common stock so that Facebook could use the proceeds to pay employees who wished to cash out their vested shares.

DST owns five social networking sites in Eastern Europe, including Russia's Vkontakte.ru and the company Forticom, which runs Odnoklassniki.ru in Russia, Nasza-Klasa.ru in Poland and One.lv and One.lt in the Baltics.

In a conference call with reporters, DST Chief Executive Yuri Milner said that his social networks were market leaders in 13 European countries.

Facebook CEO Mark Zuckerberg said in a conference call with reporters that he was interested in how DST's social networks use a variety of strategies to make money, including advertising, virtual gifts and direct payments from users.

"The fact that there are so many different models for these social networks across the world is a demonstration that these products are really creating a lot of value for users, and therefore there are ways to monetize them very effectively," Zuckerberg said. "I'm really looking forward to learning and getting more of an understanding about how these models are working in Europe and Asia."

Facebook, which has more than 200 million active users, doesn't disclose its advertising revenue. Research firm EMarketer estimates that overseas ad revenue will grow to $70 million in 2009, a 75% increase over 2008. It projects Facebook's 2009 domestic ad revenue to hit $230 million.

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david.sarno@latimes.com

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