Microsoft invests $240 mn in Facebook

Rapidly rising internet star Facebook Inc. has sold 1.6% stake to Microsoft Corp. for $240 million, spurning a competing offer from online search leader Google.

Culminating weeks of negotiations, the investment announced yesterday values the social networking site at $15 billion, a stunning figure for an online hangout started in a Harvard University dorm room less than four years ago.

Microsoft also will sell internet ads for Facebook as the site expands outside the United States, broadening a marketing relationship that began last year.

"This is a strong statement of confidence in this partnership and in Facebook," Kevin Johnson, president of Microsoft's platforms and services division, said during yesterday's conference call with reporters and analysts.

Besides validating founder Mark Zuckerberg's decision to rebuff a $1 billion takeover offer from Yahoo. Last year, Microsoft's money should be more than enough to pay for Facebook's ambitious expansion plans until the privately held company goes public.

Zuckerberg, 23, has indicated he would like to hold off on an initial public offering for at least two more years. In the meantime, Facebook hopes to become an advertising magnet by substantially increasing its current worldwide audience of nearly 50 million active users, who connect with friends on the site through messaging, photo-sharing and other tools it offers.