(Note: Todd is stuck in the I-5 mess near Centralia, so I filled in for him at Bruce Jaffe's keynote this morning at the Red Herring Global 2007 conference in Seattle. John Cook.)

Microsoft executive Bruce Jaffe said today that the $15 billion valuation that it placed on Facebook in October is "rich," but the vice president of corporate development added that the social networking startup has prospects that could "be worth well more."

He refuted questions from Red Herring publisher Alex Vieux who asked if the software company overpaid and "bubbled" the value of Facebook.

Microsoft's Bruce Jaffe

"Facebook is an interesting company. They have an interesting asset at an interesting time which is extraordinarily unique," he said. He justified the value, noting that Hong Kong billionaire Li Ka-shing just invested $60 million at the same valuation. And while Jaffe admitted that Microsoft in the past has "paid a premium" on some deals, he added that "we feel good about it."

"I think we have been disciplined in our acquisition practice," said Jaffe, adding that the portfolio approach to investing allows the company to stomach more risk in some deals.

Jaffe also addressed Google, saying there remains opportunity in the search market because "people are still not finding what they want to find when they want to find it."

"I think we absolutely have an opportunity," said Jaffe. "Are we going to overtake Google in market share in search in the next 'n' months? That is not the right question.... I think Google is going to have a fine search business for a while. I think we are going to have a phenomenal business end-to-end." He cited the addition of Brian McAndrews of Seattle-based aQuantive (purchased by Microsoft for $6 billion earlier this year) as an executive who is helping Microsoft find its way in the advertising market.

Jaffe made the remarks in a keynote at the Red Herring Global 2007 conference in Seattle in which he discussed Microsoft's acquisition strategy. While Jaffe said that acquisitions have been an "important part of Microsoft's history" -- leading to products such as Flight Simulator and Powerpoint -- he said the "pace and prominence" has increased in recent years.

Over the past two and half years, Jaffe said that Microsoft has acquired more than 50 companies at about $10 billion in value. He said the company makes acquisitions for three reasons: