MY NOTES ON TWITTER’S POTENTIAL ACQUISITION.
If you’re into startups or tech, you know Twitter has been on the chopping block for quite some time. Their stock jumped when potential suitors were named. Their stock also dropped when said potential suitors backed out. But what suitor actually makes sense to jump in and acquire Twitter?
Salesforce is an interesting suitor.
Currently has around half of the current market cap of Twitter in its own cash reserves. Stacks on stacks. But they would need to raise the remainder elsewhere if it’s an all-cash deal, or it would need to make the rest of the purchase in shares. Finance 101.
It would be the highest-ever acquisition by Salesforce, which has already spent more than $4 billion on acquisitions in the first six months of this year. Eye opener!
It already tried, but missed out, on buying LinkedIn (which Microsoft is picking up for $26.2 billion), so expensive purchases are not out of its sights completely.
But does it make sense?
Twitter is fundamentally and obviously a consumer-facing product, currently with a very strong focus on repositioning itself as a media business (content + ads around that content).
Salesforce ambition is becoming the ultimate purveyor of cloud-based enterprise services.
There could be a place where Salesforce could leverage Twitter’s consumer media play in its own larger platform, but today it seems like a step too far to the side.
MY THOUGHTS ON TWITTER.
Salesforce could use Twitter to expand significantly into a much different business area, and business model. It could bring them back to life.
It could help it really light a fire under its new Einstein big data platform with a vast infusion of real-time data.
Data is the big currency for today’s large tech companies.
Twitter, of course, is a mine of real-time data from its 313 million monthly active users.
There is also the fact that Salesforce already offers products around social media interaction and management between businesses and their customers/potential customers/wider public.
CONSPIRACY THEORIES ABOUT TWITTER!
There are other, smaller crossovers between the two companies that you shouldn’t overlook. For example, Bret Taylor, who has joined Salesforce via the acquisition of his cloud-based word processing startup Quip, is also on the board of Twitter. Salesforce and Twitter also happen to use the same M&A law firm, Wilson Sonsini (which is, admittedly, used by a lot of tech companies).
Says they’re out. But they make a lot of sense
Financial Sense: Google has a lot of cash on hand to finance the acquisition — $73.1 billion, by one estimate earlier this year.
Social Sense: Google has forever been looking for a stronger foothold in this area, which it has failed to achieve on its own over the years with its own efforts.
YouTube is the company’s biggest hope in this space, but while there is some “conversation” on YouTube alongside the vast amount of traffic and consumption of videos, it’s nothing like the almost pure-play conversation that happens on Twitter.
Advertising Sense: Could help Google expand its advertising business on desktop and mobile, tapping into a stream of consumers of social media who are slowly being lured away from Google by another huge social media platform, Facebook.
Owns Yahoo, AOL, Techcrunch
Wants to add a new wave of business to its traditional roots as a telecoms carrier.
Trying to build third-pillar in advertising to compete against Facebook and Google.