AP Reports Facebook worth $3.7 Billion

The endless speculation that Microsoft's $15 billion valuation of Facebook (through an investment) was way out of whack with reality is finally revealed to be true - even within Facebook itself!

According to court documents obtained by (and hacked by) the AP, the recent settlement of the ConnectU lawsuit shows that Facebook values itself internally at only $3.7 billion.

Techcrunch also discusses the laughable 'cut and paste' hack used to reveal the supposedly blacked out court information.... Check it out for yourself.

In light of writedowns like Google's 'mark to market' of their investment in AOL, this is not that surprising. Perhaps the greater question is why these things happen in the first place. For a promising startup with great potential, valuation can often be the consensual hallucination of where it's going to be - and this is often a self-fulfilling prophecy, as people and partners want to sign up with and do business with (and invest in!) what is perceived as the next big thing.

By encouraging Microsoft to place a seemingly high valuation on Facebook as an enterprise, was Facebook trying to game the system - create a sense that they were an emerging juggernaut, suggest a higher valuation to potential investors, acquirers, and even employees - and perhaps even impact the perception of the average consumer choosing where to spend their social networking time and attention?