The new $15 billion price tag attached to Facebook was more a reflection of Microsoft's need to do a deal with the company rather than an indication of its true worth, analysts said today.

Fears that the internet industry - which has hosted a string of multi-billion dollar deals in recent months - was entering another bubble similar to the one it experienced seven years ago were also dismissed, with analysts pointing out that in most cases investment had come in areas that showed significant growth potential.

Yesterday Microsoft announced that it would buy a 1.6 per cent stake in Facebook for $240 million, ending a months-long bidding war with Google, its arch rival, which was also keen to share a piece of the lucrative advertising revenues that Facebook is expected to start generating.

As part of the deal, which values Facebook at roughly 100 times its estimated $150 million revenues, Microsoft will have exclusive right to serve ads on Facebook's platform, expanding an agreement which was already in place for ads on the US site.

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Microsoft's investment, which makes Facebook's 23-year-old chief executive, Mark Zuckerberg, worth an estimated $3 billion - at least on paper - follows a string of high-value deals in the internet sector, including Google's acquisition of DoubleClick, the advertising platform, for $3.1 billion, and Microsoft's previous purchase of aQuantive, another server of internet ads, for $6 billion.

The deal gave rise to a wave of blog entries with titles like 'Facebook's funny money', and recalled the early valuations of Yahoo!, the search firm, which had a price to earnings multiple of 1,000 in March, 2000.

"Microsoft is partying like it’s 1999," wrote the Wall Street Journal on its Deal Journal blog.

But analysts defended the valuation, saying it was not a genuine indication of Facebook's worth but a reflection that Microsoft needed to grow its advertising business, which seen as an important new source of revenue for the company but which faces strong competition from Google.

Rebecca Jennings, from Forrester, said that Facebook, which already has more than 50 million users, most of which are in the US and Europe, still had signficant growth potential - particularly in Asia, where other social networks, like Friendster, are more popular.

"I hope this will not be seen as any kind of internet bubble developing," she said. Google's and Microsoft's recent purchases of ad platforms, too, she said, were examples of deals in "growing markets" where "tangible increases in revenue" were expected.

At a recent internet conference in San Francisco, Brian McAndrews, the former chief executive of aQuantive who now heads up Microsoft's internet advertising business, said that the sector was expected to grow to $80 billion by 2010.

Ms Jennings also dismissed any comparisons with Skype, the internet phone calls provider for which eBay recently admitted it had overpaid when it bought it for $2.6 billion, saying that internet telephony was much harder to monetise than "social computing" services like Facebook, where the advertising-based revenue opportunities were clear.

Another technology analyst, who would not be named, said: "The Facebook valuation is totally artificial. It's like saying I rent one room for £1,000 a month, and I have 10 rooms in my house, therefore my earnings potentially is £10,000 a month. It's just not the way to look at it."

Andrew Frank, an analyst with Gartner, said: "The partnership can't be measured in dollars - its chief benefit is to give Microsoft a critical foothold in the emerging ecosystem of social network-based advertising, and Facebook a formidable partner for long-term growth."

Mr Zuckerberg has repeatedly denied that he has any plans to take Facebook public, saying that the company is focused on improving its services - rather than growing revenues - for the time being.

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