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Tech Big Shots Rumored Lining Up for Twitter

By David Jones
Sep 26, 2016 12:25 PM PT
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Twitter shares remained strong Monday after Friday's sharp rise on reports that it was considering a possible sale, with Google parent Alphabet and Salesforce emerging as two of the most likely buyers.

For more than a year, Twitter has faced enormous pressure, both internally and from investors, to consider a major shakeup. It has struggled to find ways to monetize its core 140-character microblogging property to achieve convertible streams of revenue, while rival Facebook has continued to grow engagement and develop new revenue streams.

"Twitter is having trouble finding a standalone monetization model," said Paul Teich, principal analyst at Tirias Research.

"It is a great channel that needs to be funded by a more complete set of profitable services," he told the E-Commerce Times.

Twitter reported 313 million monthly active users during the second quarter, which ended in June -- a 3 percent increase from a year ago. Revenue rose 20 percent year-over-year to US$602 million. However, the third-quarter forecast called for revenue of $590 million to $610 million, which fell below Wall Street estimates.

Twitter shares rose 21 percent to $22.62 on the news of the sale negotiations Friday and were selling at $22.79 at press time on Monday.

Twitter recently launched several new initiatives to drive engagement on the network, including the highly touted first of 10 live-streaming Thursday Night Football games that went into effect earlier this month, along with other efforts to post longer-form live video content on the site.

Rival Sales

The pressure for Twitter to find a buyer only grew after Microsoft stunned the industry in June by paying $26.2 billion for LinkedIn. Verizon later acquired Yahoo for $4.8 billion, in a bid to fatten up its content portfolio, which features AOL.

Twitter's fate may rest with the suitability of the match it can make.

"If it is part of a complementary group of companies with an integrated ecosystem, it will be able to benefit from the network effect, which Instagram has enjoyed since its Facebook acquisition," Midia Research Senior Analyst Tim Mulligan told the E-Commerce Times.

Formal bids from Alphabet and Salesforce could be coming soon.

Vala Afshar, the chief digital evangelist at Salesforce, on Friday sent out a widely circulated tweet extolling the virtues of the social media company.

Salesforce does not comment on "rumors and speculation," spokesperson Katherine McLaughlin said.

Customer Cloud

There are potential benefits for Salesforce, but also potential problems.

Such a deal could divert the company a bit off its core mission, suggested Jeffrey Kaplan, managing director at ThinkStrategies.

A Twitter acquisition could "significantly enhance the collaborative qualities of its cloud solutions," he told the E-Commerce Times, as well as provide "extraordinary access to a broader set of potential customers."

On the other hand, a Twitter deal could drag Salesforce into a minefield, Kaplan warned, forcing it to contend with "the escalating sociopolitical issues that are increasingly surrounding Twitter."

"Verizon typically declines comment on M&A rumors. However, there has been a rumor circulating that Verizon has made a standing offer for Twitter, and we have said on the record that this is entirely false," company spokesperson Bob Varettoni told the E-Commerce Times.

Microsoft's name also emerged as a potential suitor for Twitter, but spokesperson Meredith Whitlock said the company "has nothing to share."


David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.


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