Microsoft Defends Facebook Stake

Microsoft Chief Executive Steve Ballmer said on Monday his firm’s acquisition of a 1.6 percent stake in socializing Web site Facebook for $240 million was an important investment, not a mistake.

“We didn’t make a mistake,” Ballmer told reporters on the sidelines of a business conference in Mumbai.

Analysts have said Microsoft paid a steep price on a bet that the three-year-old firm would be able to transform itself into a hub for all sorts of Web activity.

“The valuation of Facebook is still to be determined. Certainly today, it’s very, very popular. So for a company like ours that wants to be a pre-eminent presence in this space, it’s very important for us,” Ballmer said.

“Will Facebook be worth $5 billion, $15 billion or $50 billion some years down the line is really up to their team and how they take it forward.”

Ballmer, who joined Microsoft in 1980 at the request of his Harvard classmate Bill Gates, said last month that the company was focusing on up to 20 smaller acquisitions of $50 million to $1 billion each annually rather than mega-deals.

Asked if Microsoft was interested in buying Yahoo, Ballmer said: “My answer is a considered ‘no comment’.”

“We want to succeed in the online advertising space. What happens with Yahoo, we’ll all have to wait and see.”

Ballmer, who is going to China on Monday night, said the Chinese market was important to Microsoft and that they were making some progress on the issue of intellectual property rights.

“We’ve made some progress, and there’s better respect for software intellectual property there than there was three years ago,” he said.

“That said, it’s still lower than in a lot of other countries. So depending on how you look at it, life’s getting better, or life’s bleak,” he said.

In July, officials said pirated software worth $500 million, including counterfeit Microsoft and Symantec products, had been seized in a long-running joint probe by Chinese police and U.S. Federal Bureau of Investigation.

Microsoft has said more than a fifth of its software running globally was pirated and that cracking down on them can boost sales.

Ballmer also said technology companies may face a lower capital spending by businesses because of the turmoil in the financial markets.

“There are some concerns about the impact that interest rates, the debt market problem and defaults might have on business spend,” Ballmer said.

“So we will have to keep an eye on it. I don’t think things will collapse completely but we do think that there may be some sort of a setback or a cut down to capital spending,” he said.

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