Facebook, Inc., Microsoft Corporation - Special Call - NasdaqGS:META

NasdaqGS:META

Vivek Varma made several announcements and provided introductions during the special call on October 24, 2007. Here is a detailed summary of his statements:

Opening Remarks

• Introduction:

  • Thanked participants for joining the call.
  • Noted that the call is being recorded and informed participants that they could disconnect if they objected to the recording.

• Call Logistics:

  • Provided instructions regarding the format of the call, including the question-and-answer session.
  • Introduced himself as Vivek Varma from Microsoft and mentioned the presence of Owen Van Natta, Chief Revenue Officer for Facebook, and Kevin Johnson, President of the Platforms and Services Division at Microsoft.

• Housekeeping Notes:

  • Announced that a replay of the call would be available for one week, providing the toll-free and international numbers.
  • Clarified that the call would not discuss recent financial results or guidance, as these topics would be covered in the upcoming earnings call.

Press Release Announcement

• Press Release Error:

  • Acknowledged errors in the initial press release and informed participants that a corrected version would be issued.
  • Read the final version of the press release, detailing the strategic alliance between Facebook and Microsoft.

• Summary of Press Release:

  • Highlighted the key points of the partnership, including Microsoft's $240 million equity stake in Facebook and the expansion of their advertising partnership to cover international markets.
  • Emphasized the significance of the partnership for both companies, particularly in terms of leveraging Microsoft's advertising platform and enhancing Facebook's technology leadership in social computing.

Transition to Executives

• Handoff:
  • Passed the call over to Owen Van Natta and Kevin Johnson for additional comments before opening the floor to questions.

Closing Remarks

• Question-and-Answer Session:

  • Invited questions after Owen and Kevin's remarks.
  • Managed the Q&A session, directing questions to the appropriate executive.

• Call Conclusion:

  • Provided information on how to access the call replay.

  • Confirmed that a corrected press release had been distributed.

  • Thanked everyone for participating and concluded the call.

During the special call on October 24, 2007, Owen Van Natta, the Chief Revenue Officer for Facebook, made several statements. Here is a detailed summary of his comments:

Opening Remarks

• Owen expressed excitement about deepening the partnership with Microsoft, stating that it is consistent with Facebook's focus on innovation and continued growth.
• He emphasized that Facebook is a technology company and that the partnership aligns with its focus on creating the best user experience for its nearly 50 million active users.

Response to Brad Reback (CIBC World Markets)

• Owen did not directly address Brad Reback's question about the valuation of Facebook but instead highlighted the successful partnership with Microsoft and the decision to expand the relationship globally.

Response to Charlie DiBona (Sanford Bernstein)

• Owen did not disclose any specific terms regarding the partnership beyond advertising but indicated that there is a strong alignment between both companies around innovation and technology that positively impacts users.

Response to Brier Dudley (Seattle Times)

• Owen explained that Facebook had multiple interested partners but chose Microsoft due to the successful and longstanding partnership they had.
• He stated that deepening the partnership with a leading technology company like Microsoft made sense for Facebook.
• Owen assured that there would be no restrictions for third-party developers on the Facebook platform, and that the partnership would create new opportunities for developers to integrate with Microsoft technologies and adCenter.

Response to Michael Arrington (TechCrunch)

• Owen confirmed that Microsoft is the only investor being announced in the current round of financing.

Response to Karen McCarthy (CNETnews.com)

• Owen did not comment on any reciprocity or integration between Facebook and Microsoft's web properties, as the scope of the announcement was limited to the expansion of the advertising partnership.

Response to Josh Quittner (Fortune Magazine)

• Owen declined to name other interested parties in the advertising partnership, focusing on the excitement about the partnership with Microsoft.

Response to Michael Liedtke (Associated Press)

• Owen reiterated that the focus was on deepening the advertising partnership and the accompanying equity investment, avoiding discussion about an Initial Public Offering (IPO).

Response to Earl Barker (Financial Times)

• Owen clarified that the partnership announced does not include web search and is focused on the adCenter platform for Microsoft.

Response to Joe Menn (Los Angeles Times)

• Owen reinforced that Facebook's main focus is on creating the best user experience for its 50 million active users and that the partnership with Microsoft supports this goal.

Response to Om Malik (GigaOM)

• Owen explained that the raised funds would be used to support innovation and growth, including expanding the employee base, particularly developers, and investing in technical infrastructure to handle the rapid user growth and international expansion.

Response to Ellen Lee (San Francisco Chronicle)

• Owen described the ongoing discussions with Microsoft and the evolution of the partnership, highlighting the mutual focus on innovation and the deepening of the partnership.
• He explained the collaborative process and the acceleration of discussions, leading to the finalization of the partnership.

Response to Sasa Zorovic (Goldman Sachs)

• Owen discussed the exclusive partnership with Microsoft and the coordination between Facebook's sales force and Microsoft to serve advertisers effectively without creating confusion.

Response to Brian Morrisey (Adweek)

• Owen emphasized the importance of user trust and the need to provide a relevant and targeted advertising experience while respecting user privacy.
• He mentioned the leveraging of Microsoft's adCenter platform and its scale for targeting ads on Facebook.

These statements provide insight into Owen Van Natta's perspective on the partnership with Microsoft, the focus on user experience, and the strategic direction of Facebook.

During the special call on October 24, 2007, Kevin Johnson, President of the Platforms and Services Division at Microsoft, made several statements regarding the strategic alliance between Microsoft and Facebook. Here is a detailed summary of his remarks:

Opening Remarks

• Confidence in Partnership: Kevin expressed that the deal represents a major advertising syndication win for Microsoft and signals an enormous vote of confidence from their largest advertising partners, emphasizing that the partnership is global and deep.
• Win-Win-Win Situation: He described the deal as a win-win-win, beneficial for Microsoft's advertising platform, for Facebook's strategy, and for delivering value to users and advertisers.

Response to Brad Reback's Question

• Online Advertising Marketplace Context: Kevin provided context about the online advertising market, projecting it to grow from $40 billion to over $80 billion in the next two to three years.
• Confidence in Investment: He explained that the equity stake in Facebook is a strong statement of confidence in the partnership, the ad platform's growth, and Facebook's innovation in social networking.
• User Growth Potential: Kevin discussed the potential for Facebook to reach 200 million or 300 million users, which justifies the valuation based on a modest average revenue per user (ARPU).

Response to Charlie DiBona's Question

• Technological Relationship: While not disclosing specific terms, Kevin hinted at potential deeper technological collaborations, such as leveraging Microsoft's Live Platform APIs within Facebook and aligning both companies' focus on innovation and technology.

Response to Brier Dudley's Question

• Focus on Innovation: Kevin reinforced Facebook's commitment to innovation and the positive impact of deepening its partnership with a leading technology company like Microsoft.

Response to Karen McCarthy's Question

• Global Advertising Partnership: Kevin clarified that the scope of the announcement was the expansion of Microsoft's role as the exclusive third-party advertising platform partner for Facebook globally.

Response to Michael Liedtke's Question

• Terms of the Deal: Kevin addressed rumors about the size of Microsoft's stake, stating that the terms announced were the ones that best fit both companies' interests.
• IPO Plans: He deferred questions about Facebook's IPO plans to Owen Van Natta, Facebook's Chief Revenue Officer.

Response to Earl Barker's Question

• Deal Scope: Kevin confirmed that the deal focuses on the ad platform and not web search, emphasizing the collaborative approach to developing new ad types unique to the social experience.
• Value Proposition: He highlighted the overall value delivered to users and advertisers through the partnership.

Response to Joe Menn's Question

• Economic Benefits: Kevin stated that Microsoft is pleased with the economics of the global partnership, including the responsibilities and benefits for both companies.
• Strategic Value: He emphasized the broader strategic value of the partnership, including the equity position, which aligns with Microsoft's goals.

Response to Om Malik's Question

• Performance on Ad Platform: Kevin reported that Microsoft sees continued improvement in monetization on the Facebook ad platform, with initiatives in place to drive higher monetization.
• Non-Disclosure: He noted that specific financial details of the partnership would not be disclosed but affirmed that both parties see improving monetization trends.

Response to Ellen Lee's Question

• Evolution of Partnership: Kevin shared that he and Owen Van Natta had spent a lot of time together discussing strategic matters important to both companies, highlighting the importance of open and candid discussions in building a strong partnership.

Response to Brian Morrisey's Question

• Targeted Advertising: Kevin reiterated the importance of delivering highly relevant and targeted ads to enhance the user experience and advertiser ROI. He mentioned leveraging Microsoft's adCenter platform, Atlas tools, and DRIVEpm network to achieve this goal in collaboration with Facebook.