Yahoo may acquire Facebook for $1 billion

The largest and most comprehensive information portal on the Web, Yahoo Inc. apparently is in the final stages of negotiations to acquire social-networking Web site Facebook.com, according to a Wall Street Journal (WSJ) report, released on Thursday.

The Palo Alto based Facebook that allows users to post profiles online and chat and which has been at the center of takeover rumors for months, had similar talks about a possible sale of the company to the world's largest software maker, Microsoft and media conglomerate, Viacom over the past year.

The volume of the acquisition is ambiguous yet, but speculations are on air that it could reach up to $1 billion, the WSJ reported. Both Yahoo and Facebook refused to comment about any specific talks.

If the deal is successful, the acquisition would confer Sunnyvale, California based Yahoo a bigger existence in social networking, an increasingly famed diversion for young people who use the services to create personal Web pages and send messages to friends.

This social networking area is especially coveted by large media companies, which consider social networking to be a lucrative way of showering teens with advertisements.

The site drew investor attention when News Corp. bought MySpace for $580 million last year, and General Electric Co.'s NBC Universal bought women's online network iVillage for $600 million earlier this year.

The most preferred social networking service site recently faced the protest of more than 700,000 members, who strongly expressed their disapproval to new features that allow members track their friends. While sharing information is one of the core features of social networking, many Facebook members were distressed and some called the new features "stalker-ish" and "TMI - too much information". Protesters have even created the "Students Against Facebook News Feed" group within Facebook.

Facebook, which connects people through schools and permits users swap photos and other information, was created and launched by two Harvard sophomores, Mark Zuckerberg and Chris Hughes, in 2004. It is a type of virtual yearbook, where members sign up to find others from their high schools, colleges and universities. It has become a top Web destination, with 14.8 million unique visitors in August, 2006, alone, of those 56.6% were younger than 35 years. The site reportedly approaches $100 million in annual revenues.

According to the sources familiar with the possible deal, Yahoo initially offered Facebook $1.4 billion but talks broke down in July, nearly the time Yahoo shares shed 20% of their value on reports that its new targeted advertising technology would be delayed. Some time back a newspaper reported that the social site had turned down a $750 million offer and expected to fetch as much as $2 billion in a sale. It has been separately reported that Viacom was in talks to acquire Facebook.

The WSJ in its report quoted Zuckerberg as saying: "I would never say that at no point in the future would we go public or become part of a larger company ... but what I would say is, it's not our priority."