Tags: Buffett | not | investing | Facebook

No Friending Warren: Buffett Says He Won't Invest in Facebook

By    |   Friday, 04 May 2012 09:33 AM

Investment icon Warren Buffett has never been an investor in technology: he has said he doesn’t understand it well enough. So it shouldn’t be a huge surprise that he doesn’t plan to invest in Facebook’s May 18 initial public offering (IPO).

But what the social media colossus is doing is “extraordinary,” Buffett tells CNBC. “People get excited about companies that have done that well.”

What may surprise you is that the Berkshire Hathaway chief doesn’t see the frenzy surrounding tech companies as a bubble. This assessment comes despite the fact that Facebook itself just bought mobile photo application company Instagram, which has zero revenue, for $1 billion.

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“It is not a bubble,” Buffett says. “This is not what we were seeing in late 1999 all the way into 2001. We aren’t in any bubble phase of anything.”

Some tech experts beg to differ.

“This is 1999 all over again, but this time, it’s gotten worse,” Jeffrey Pfeffer, a professor at Stanford business school, tells The New York Times. “We’re back to companies throwing around funny money. The economic values don’t add up.”

Investors are even telling start-ups to avoid revenue so they can value their companies at whatever amount they please.

If you agree with Buffett but do want to purchase shares of Facebook’s IPO, you may be in luck. Wall Street executives estimate that 20 to 25 percent of the offering will go to retail investors, The Times reports.

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Friday, 04 May 2012 09:33 AM
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