Microsoft’s Decision to Friend Facebook Is Looking Good - Deal Journal - WSJ

Another aspect of the Microsoft/Facebook story (i.e., beyond the potential return-on-investment dimension below): check out Docs, a free service, currently in beta testing, that makes Office Web App-based collaboration and content sharing, hosted on Windows Azure, freely available via the Facebook identity service.

Then three months ago, our colleagues at the Digits blog reported that “investors currently buying or looking to buy Facebook shares anticipate the company will go public in 2011 with a market capitalization of between $35 billion to $40 billion, according to people familiar with their thinking.”

Investors valuing Facebook at $35 billion to $40 billion also estimate its revenue this year at $1.2 billion to $2 billion.

The revenue figures reported today support such estimates. If Facebook was to go public at such a valuation, Microsoft stands to earn a tidy profit on its investment if it cashes out–something it may well not want to do. At the very least Microsoft’s investment in Facebook, at less than 15 times projected 2010 revenue, now doesn’t look as outlandish today.

Microsoft’s Decision to Friend Facebook Is Looking Good - Deal Journal - WSJ