Microsoft May Trade Bing for Facebook Shares

Microsoft may be considering giving up its Bing search engine in favour of additional Facebook shares. It seems the company already has a report on the matter and researchers see it as a win-win situation.

The story appeared on CNBC earlier today, when Gary Kaminsky, capital market editor, made reference to a report that apparently claims Microsoft might be willing to trade Bing for additional Facebook shares.

When hearing the news, Rick Sherlund of Namura Equity Research, advised that the deal would be a great opportunity for the Redmond-based software maker, as Facebook would be removing a problem from Microsoft's shoulders.

Sherlund also states that the company loses $2.5 billion a year with Bing, meaning a huge "7-percentage-point hit to operating margin". Also, investors have lost interest when it comes to Microsoft's search engine, as no rewards have been claimed.

Considering past rumours about Facebook making an investment towards building its own search engine, Sherlund acknowledges that Microsoft could give up all the work and still benefit from 80 per cent of the revenue, through traffic acquisition costs. These costs would integrate traffic from services like Xbox Live and Skype.

Moreover, Microsoft could hurt Google in the process, Facebook being a far greater competitor to the "monopole" Google has over the search engine market, than Microsoft alone. Also, Sherlund adds that all social data collected by Facebook could be used to enhance Bing.

Sherlund concludes by saying that Microsoft may get between one and two per cent of Facebook shares, if the deal happens.

Source: Barrons