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Report: Appraisal Set Facebook Value At $3.7 Billion

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imageA Facebook appraisal discussed in court last summer put the value of the social network at $3.7 billion, a far cry from the $15 billion valuation based on Microsoft’s 2007 investment. The info comes from the Associated Press in a report that explains how it cracked the electronic versions of blacked-out court documents. According to AP, the appraisal, which was used to set the value of employee stock options, came up during a closed court hearing in a lawsuit by former classmates of Mark Zuckerberg’s who claimed he stole their idea.

Facebook lawyers argued that the appraisal of its common stock couldn’t be compared to Microsoft’s $240 million payment for 1.6 percent of preferred stock. At stake: the basis for a settlement with Divya Narendra and twins Tyler and Cameron Winklevoss, founders of social net ConnectU. According to AP, the settlement called for $20 million in cash and 1,253,326 shares of common stock; by Facebook’s internal math, the common stock was worth $11 million compared with $45 million at the Microsoft (NSDQ: MSFT) value. That would make the settlement worth anywhere from $31 million to $65 million.

The Microsoft-Facebook deal was similar to Google’s $1 billion payment for 5 percent of AOL (NYSE: TWX) to help the Time Warner unit get a value of of $20 billion. Google (NSDQ: GOOG) wrote that down by some two-thirds last month, then acted on a clause allowing it to demand repayment at fair market value or for an IPO.

In an odd piece of symmetry, the lawsuit is in the news for another reason: legal pub The Recorder reported that Quinn Emanuel Urquhart Oliver & Hedges, the law firm representing the twins, published a brochure bragging about the $65 million settlement obtained in the case. Tiny problem — the amount was supposed to be confidential. Also, the law firm was no longer working for twins when the judge finalized the settlement and is now in a fee dispute.

Earlier today, we reported on about Facebook’s possible app deal with *Nokia*. The status of it? “It’s complicated”…