Why $240 Million could have been a deal for Microsoft

Ok so everyone knows about the news that Microsoft paid $240 M for 1.6%  of Facebook. Terrence Russel at Wired thinks it was a good deal and I do too but for different reasons.
 

I did a little checking on Google Finance and there's something interesting that happens. Once the Microsoft / Facebook rumor gets out and is judged to be serious the stock jumps 1%. It then jumps another 1% in after hours trading when the announcement is confirmed. On a market cap of about $290B that means that MSFT was valued at an additional $ 6B after the deal.

I'll admit I'm not an expert on the market but it sounds like turning $240M into $6B is a good move.

Comments

[LetsNotForget]

You never know if stock prices jump on a rumor or for some other reason. But you do know that with a 15B market cap, Facebook has only ONE exit strategy and it's not an IPO, it is MSFT. So they are essentially off the market - nobody will buy them at the ludicrous number and MSFT looks like a genius for spending a paltry 240M to essentially own then - and they can decide if they actually want to OWN them later once a determination has been made on whether social networking has legs, or not. This is what happens when a bunch of kids are running the show and think valuation is cool without thinking about the consequences.