bird_man wrote:@hill . . .very nice read and all.However,apart from your hate or disapproval of facebook,you really havent shown HOW or WHY you think its all hype.Hate it or love it,Im a user,probably your kids are users too . . . .once they figure the right cash generation model we shall start using our cards.There were so many who said Google was hype coz nobody had ever imagined of a model that search could use to generate money. . .right now? . . . .we are all using it now and it makes tonnes of money.
Thanks Bird_Man. Facebook certainly has a value, to both the US government, as I have explained, and to whoever buys it for a ZILLION dollars (Chinese government maybe LOL), because the value of millions of people's personal information... what is that worth? What is it worth to know who likes who and what, and dislikes who and what? Who knows who, and what everyone looks like? What's that worth?
It's like a Picasso... whatever someone is willing to pay.
As far as Google, same model... take over an internet industry by throwing up hundreds of millions of servers and collecting information. Then, bribe the bigger sites and browsers to include you as a homepage, or a search tool. Have a ranking system. Pay for referrals. Advertise. Not genius, when you have deep enough pockets. There is no magic here, and Google is likely overvalued, as analysts have even said time and again. Like I said, most companies in the US don't make money how they say, they do it playing games WITH money because they have so much of it (or credit). That is what has made the US markets so dangerous.
My point is, valuation in the US markets is meaningless, because there aren't real numbers to back it up. So, there is no magic to social media, and there is no "dream app" out there. Google is a search engine. An index. Not an original idea. They now have thin apps. Also not new. Facebook is a place where people can show off and post crap and chat... not an original idea. There is no "magic" here, other than the fact that some "interesting" organizations gave a nerdy kid hundreds of millions of dollars to build something that hasn't made its cost back yet. That's the gag. I don't think it's understood... it can be utopia in a box... also not an original idea, and without the $100,000,000 infrastructure behind it, it won't be anything. Once again, what is that worth? It hasn't made it's money back, it has no clear way of doing so. So, where is the stock price going? based on what? Something "cooler" could come out tomorrow, and everyone could switch to it. Other countries could start blocking it because of privacy or security issues. I see people on Wazua and other forums dreaming of some magic web application that's going to make billions, when the focus should be on building solid technology companies so that Kenyan-based (REAL Kenyans) companies can provide ICT services to the whole continent, not SA, and not India. This can be done without 10,000 servers and a billion in the red.
And Facebook is not allowed in my house. It's blocked at my firewall.
So, we'll see who buys it. The cash generation model is easy... sell stuff to people and monitor people based on the information that they freely volunteered. Read Facebook's terms of use. It's very clear what they are doing.
If you want to know why I think the US markets are all hype in general (and hype does sell, but cannot be accurately valued), I explained that, but I could go into further detail...
Simply:
NSE: Companies have to make a product or service that has value and makes money or the company fails. Stock price based on numbers.
NYSE, NASDAQ: Companies have to generate so much hype that they get billions in credit to do with as they wish and hope that something "sticks"; must juggle money and cook the books, otherwise they... get bailed out LOL. Stock price based on (bribed) analysts, trading volume, and popularity of CEO.
Best,
Hill