Warren Buffett advised Mark Zuckerberg, won't buy Facebook shares

Warren Buffett advised Mark Zuckerberg, won't buy Facebook shares

Summary: Facebook co-founder and CEO Mark Zuckerberg recently asked Berkshire Hathaway CEO Warren Buffett for advice. Although the two men talked for hours, Buffett doesn't plan to invest in Facebook.

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Facebook co-founder and CEO Mark Zuckerberg didn't just seek advice from the late Apple co-founder and former CEO Steve Jobs. Most recently, he's been getting guidance from investor Warren Buffett on how best to take the social networking giant public. That being said, Buffett has stated he isn't interested in buying Facebook stock.

Buffett says he and Zuckerberg talked for hours, according to a message from CNBC's Becky Quick on Twitter:

Buffett just told me he spoke to Mark Zuckerberg for hours about taking Facebook public. Offered advice. #BuffettWatch #BRK2012

That's not all. At the Berkshire Hathaway annual shareholder meeting today, Buffett says he won't be buying Facebook shares. Well, for now anyway. There's nothing stopping Buffett from changing his mind eventually.

The Berkshire Hathaway CEO was specifically referring to investing in Facebook's initial public offering (IPO), but he did note that what's happening in Menlo Park the is "extraordinary." Buffett told CNBC that "people get excited about companies that have done that well," but didn't elaborate further. He did however deny talks of an Internet IPO bubble.

"It is not a bubble ... this is not what we were seeing in late 1999 all the way into 2001," Buffett was quoted as saying. We aren’t in any bubble phase of anything."

Rumor has it Facebook will launch its actual roadshow Monday and go public in less than two weeks. Shares are expected to be priced on May 17, with trading beginning on May 18.

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Topics: Legal, Banking, Social Enterprise

Emil Protalinski

About Emil Protalinski

Emil is a freelance journalist writing for CNET and ZDNet. Over the years,
he has covered the tech industry for multiple publications, including Ars
Technica, Neowin, and TechSpot.

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14 comments
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  • Buy

    Facebook has no real competitors and they have a captive addicted audience. They'll be riding high for a while but be on the lookout for up and comers and be ready to sell it when the time is right as this isn't the kind of company that will last forever but for the moment, do yourself a favor and get in while the getting is good.
    Nathan A Smith
    • Facebook is a FAD, not a product with a market

      And FADs have the lifespan of about 5 years. Facebook is already in year 4, it has reached ceiling level and is already in a down spiral with a slow acceleration.

      Investing on Facebook when it already peaked is totally stupid. The company has ZERO chance of real growth. The best anybody can hope is that the FAD last longer than normal .... but that is very unlikely given the current down spiral state.
      wackoae
  • What does facebook offer? It's not an answer to an actual NEED.

    If anything it's a want. But a want for what? To be connected? To be heard? To be payed attention too? All in all it seems to be rather like an emotional drug praying on some of human beings weaker tendencies.

    Pagan jim
    James Quinn
    • Social Connectedness

      Human beings are the most social organisms on this planet by far with the possible exception of ants and even ants only really care about their closest relatives (all 100,000 of them). Facebook and sites like it feed the need for connectedness and send it into overdrive. There are a lot of huge corporations that have been around longer than you and I have been alive that cater to less (see: Coca Cola).
      Nathan A Smith
    • Got me killed

      [ul][i]Not an actual NEED[/i][/ul]I was like you in a previous life. Then I gave my wife a washing machine for Christmas. She hit me over the head with a brick, and killed me on the spot.

      This time around, I don't worry so much about 'needs'.
      Robert Hahn
    • Many say that of Apple products

      the iPad in particular. It is more a want, then a need.

      :|
      Tim Cook
      • And some use it for productive work....

        Pagan jim
        James Quinn
  • Translation: You have to be a fool to invest on Facebook

    Warren Buffett did not get where he is by making dumb decisions.

    Here is a question to people who are still not getting it: How much have investors made after investing on Groupon and Zinga??

    Guess what? Facebook is in the exact same category of stock quality.
    wackoae
  • No suprise here

    Warren Buffet has been reluctant to buy tech stocks on the whole. He likes to invest in things he fully understands. A smart man.
    A Grain of Salt
    • Yes he is, but........

      I think he's showing his age by sinking 10 billion or so into IBM. He was around when IBM WAS tech, period. To him I think IBM is still tech personified. He considers Google and Apple to be "upstarts" compared to IBM, and by doing that, I think he's missing out on some really good investing opportunities. But he is definitely smart to avoid Facebook!
      Userama
  • Invest Wisely

    A social network is not a life changing invention. MySpace once wore the crown, but look at them now. As soon as the new kid on the block does something cool Facebook will become old news. Once upon a time kids imitated Kriss Kross, and wore their pants backwards. I bet you $10 Million you won???t see that again!

    http://www.searchengineroyalty.com
    SERGroup
  • Buffett *not* expressing Facebook offering opinion

    In a recent CNN interview that covered this topic, Buffett notes that his company *never* invests in new offerings: period. He's not making a comment on Facebook, per se. Media outlets have distorted this into an opinion on Facebook's potential. It's not. It's an opinion on short-term investing, period.
    talbott_chris
    • You might be right, but,...

      companies such as Facebook can't actually come up with long-term predictions for growth, other than guesswork and hope. Nobody should ever invest in guesswork or hope, and especially when the market segment that Facebook is in, is subject to the fickleness of people. People can be very fickle about something that is popular today, and then move on to the next thing that strikes their fancy. That's the way it is with the sneakers/athletic shoes market, where some sneaker company comes up with a very popular design, then the competition comes up with a better design, and, voila!, someone loses while the other one wins.
      adornoe
  • Warren Buffett is correct!

    I often disagree with some of his moves, but this one is completely right on cue. His stance against this shows his true honesty about this marketing FB IPO circus.

    If the FB IPO was legit and the application platform would have a good ROI, than he would invest. But since he looked at the numbers they truth starts to reveal an overinflated marketing circus of marketing companies working for shares to promote a worthless stock.

    (If the application was SOLID, it would sell itself) Since they are spending more on marketing, and have hired all former marketing chiefs, than this company will by only for marketers, so its a marketing social network. The product they are selling is not solid which means they need to spend 90% marketing it.

    PLUS, the code is developed in PHP. So this has NEVER been talked about. What are their plans about this? PHP??
    When you break the numbers down, they are SELLING each users data for less than $1 dollar per user, which from data from previous years shows that this number is falling. Then when you calculate the amount of money they plan to make given the estimated value of said IPO, you start to wonder that it would take every person in the world to become a member inorder for them to get a mild return from investors. Chances are that every human on the planet using FB are very slim. Taken into consideration that the majority of new userbase is just marketing bots you start to wonder the QUALITY of marketing they are selling.

    Additionally when you sign up as a business, to market to FB users the evidence of amount of people who viewed your ad is NEVER displayed. This is due to FB policy online, that no user can see this information. So why would marketers pay for a service with zero results.

    When you look at their books and the estimated projections of this IPO, states that 100% of income is from marketing customers. So there you have it, with nothing to sell to the public, no products, no services, and one hundred percent coming from marketing than you wonder how are they going to do this. Impossible when you calculate the numbers they never lie.

    Another factor is the laws of privacy and the changes in perception of unwantingly sharing of users data. As the stock starts to fall, they will be more determined to change their privacy policies in order to profit more which will ultimately create mass account deletions.

    When people sart to see the amount of wasted time spent on those social networks. Social networks are so 90's, just a fad. Look at myspace for an example at the overall outcome of this stock.

    What made me turn off this IPO was the amount of marketing companies getting shares for promoting misleading information.

    I will not be investing in this IPO.
    accountisdeleted