Potential billion dollar baby

Microsoft's potential equity buy-in of Facebook might value the company at over US$ 10 billion, a figure that sparks heated discourse about the true long-term value of a social networking site that Steve Ballmer dismisses as merely "faddish."

In a report called Facebook: Why Is It Worth So Much to Google and Microsoft?, analyst Jordan Rohan of RBC Capital Markets suggests the market has "mischaracterized" Facebook, leading to an underestimation of its true value, reports Research Recap.

Rohan's argument stems from the theory that Facebook is more a technology platform than a social networking firm, based on the following three focal points:

1. Ongoing efforts to evolve the "technology platform" to support third-party developers
2. Monetization of the platform without diluting its sparing "suburban" appearance
3. Expansion of the site's reach with access to languages beyond English

The Research Recap report also cites an interview between Steve Ballmer and the Times of London. Ballmer admitted social networks "have some legs, and yet there's a faddishness, a faddish nature about anything that basically appeals to younger people."

The Microsoft executive did not confirm or deny talk about an equity buy-in.