Facebook is challenging Google to buy Twitter for around $11 billion.
The funniest thing about this story is that it’s a rerun. Discussions to sell Twitter to one of those two bigger Web entities go back as far as November 2008, when Facebook had offered to purchase the company for $500 million, largely in stock. Though the deal reached late stages, Twitter supposedly walk away because of the meager cash portion offered. Then in April 2009 reports said that Twitter was in late stage negotiations with Google, which was rumored to be offering the startup over $250 million in combined company stock and cash.
That was all before Twitter’s epic growth spurt in mid-2009, when the mainstream media fell in love with the site’s ability to be both a gateway to celebrities and a mouthpiece for revolutions. More recently, in November 2010, sources said Google had “casually” offered Twitter between $2.5 and $4 billion.
It’s worth noting that throughout all these discussions, and this is still the case today, Twitter’s revenue has never matched its valuation, for the most part. At least on a fundamental level. The site has lost money every year it has been in existence.
Promoted Products, Promoted Tweets, Promoted Trends, etc., were introduced last year, bringing 2010 ad revenue for the site to around $50 million, according to eMarketer, but the company still lost money in 2010. The company’s revenue could triple to about $150 million this year, but that’s just an estimate. In the end, it depends on whether advertisers stick with Promoted Products or not.
I hope Facebook wins. The companies could merge to form the biggest waste of time the world has ever seen.
Watch this space…
by John Jackson