
Twitter's debt assigned 'junk' status - InternetGiant
http://www.bbc.com/news/business-30048344
======
ilghiro
I find Twitter and it's user base incredibly interesting. On the one hand it's
portrayed as an "Everyone" product. There's no reason you or your friend Bill
or your boss or your Grandma couldn't use it. Because of that people have
historically signed up in droves and it's valuation has increased.

In reality though (and this is entirely anecdotal), Twitter isn't something
that everyone can use. A lot of people find it difficult to figure out what
they should say, how to keep track of who they follow and simply how to engage
with it. It isn't that everyone product. You do still have an enormous
community of people though that use it frequently and keenly and recently
their monetization offering (advertising platform) has become far more
impressive.

I would guess then that the valuation and share price has to come down a bit
(which this is a signal of) to reflect the change from an "Everyone"
(Facebook, Google, Amazon) offering to "Quite a Lot of People" (Pinterest,
Tumblr etc) product.

~~~
nhstanley
Yea, I know it's a really tired subject, but twitter really needs a major
overhaul from a usability perspective. I think they should keep the 140
characters as a limit for what is shown in peoples feeds, but the character
limit should be much higher. This is particularly important when you get into
a conversation with many people, and the handles start taking up most of your
140 characters (as Marc Andreessen recently pointed out). It's also really
hard to follow conversations, and they get separated somewhat arbitrarily. You
might scoff and say that this would basically facebook-ize twitter, but
honestly I don't think that's a bad thing. Facebook is moving into twitter's
space, so twitter shouldn't be be so slow to act or it will get eaten, IMHO.

Also, I use twitter to keep up to date on some of the industries I'm
interested in, and while it's a great tool it's still frustrating sometimes,
since there is a flood of info throughout the day. TweetDeck makes it better
since I can group things by interest and triage depending on how much time I
have. I guess you can do that with the web interface but I have never found it
as natural as with Tweetdeck.

~~~
diminish
In similar lines here are my observations as a heavy business and personal
user:

1\. 140chars limit had a goal and philosophy which conflicts now with image
attachment flood. Most "interesting" content is typed or pictured in the
attachment and the 140char limit is simply worked around

2\. Twitter UI is too clunky for what it does. No progress since 7 years I'm
using it.

3\. Twitter mobile apps don't work properly when mobile. You can't favorite,
retweet or comment properly while in an unreachable zone. My 2008 hobby
Android 1.1 app has a local queue to cope with remote updates, inserts and
Twitter can't implement this?

4\. Families aren't on Twitter. Friends to a certain degree. Colleagues to a
certain degree. Celebrities/followers yes. Gamers no. Protestors yes.

5\. Facebook, LinkedIn implemented the "follow" feature quite successfully.

6\. Notifications work, Discover not much.

~~~
randomsearch
> Twitter UI is too clunky for what it does. No progress since 7 years I'm
> using it.

This. A million times this. I don't understand Twitter. I don't get what the
hell they're thinking of, when they release (for example) the horrific design
that is the Twitter desktop and Mobile apps. An incredibly common use case is
to have more than one twitter account and switch between them. Go try it.

A bunch of people brought out superior apps, and Twitter just killed them.

If this is representative of the thinking going on at Twitter, they are
(deservedly) doomed.

~~~
bjelkeman-again
Tweetbot has a good implementation of multiple accounts. Both on the Mac and
iPhone.

~~~
comex
I use Tweetbot on both platforms, but I don't think its implementation is
good. Good to me would be a merged feed with tweets and mentions from all
accounts, analogous to what I can do with email, IRC, instant messaging, etc.;
maybe not the best for opsec, but more convenient for casual purposes than
having to constantly switch between accounts.

~~~
bjelkeman-again
Ah, different use cases. The way it works at the moment is what I was looking
for, but I can see when it isn't suitable.

------
spindritf
_In October, Twitter reported a disappointing 7% fall in timeline views per
user - a closely watched measure of engagement - despite a 23% growth in its
user base in the third quarter._

"Despite"? Not "because of" by any chance? That would be my first thought,
that they simply diluted their hardcore audience.

------
madaxe_again
This is what happens when you continually base valuations on number of users,
rather than, say, revenue, or profitability. Yes, a user base can be an
indicator of a company with traction - but if there's no revenue, or no
functioning model which will lead to revenue... the value is entirely
hypothetical, and based on weak foundations.

I expect to see a lot more of this sort of thing, which will culminate in the
current bubble conclusively popping. It'll only take a few more S&P
announcements like this to cause a panic sell-off, at which point... let's
party like it's 1999.

~~~
nikcub
Twitter's valuation _isn 't_ based on users - the stock is down ~35% this year
despite user growth being 22% and revenue more than doubling.

The stock is being trashed because they missed earnings.

The S&P report itself said Twitter is experiencing very strong growth and
little competitive pressure. It was downgraded because Twitter are investing
their cash rather than hoarding it. Bond holders want companies to hold cash.
What is good for bond holders is usually different to what is good for stock
holders.

The long case on Twitter is that the fundamentals are good, the company is
growing like crazy and that the market is undervaluing based on earnings which
mostly missed because of one-off employee option and other writedowns as well
as reinvestment.

~~~
jacquesm
It's really funny that within 12 months of an IPO a company can be scolded for
investing their cash rather than hoarding it. Hilarious, really.

------
leeber
This may or may not directly apply to twitter, but I really don't understand
how unprofitable companies with no direct revenue model get such large
valuations based on: number of users, and "potential" to profit from
advertising.

Snapchat? Tinder? Twitter? Quora? Tumblr? Etc.

It seems like these are the companies that are viewed as prestigious and
noteworthy by the media and startup community. Everybody wants to be the
company that gets a massive funding from VC and millions of users. But all of
these companies still have yet to prove they can really do it.

The only returns for investors so far is based on the fact that the
theoretical valuation keeps going up, and it's self perpetuating. At what
point are investors going to expect real earnings to justify the valuation?

Nobody (or very few people) seems to want to solve a real problem, or offer a
really useful product that people are actually willing to pay for.

Everybody just wants to get a million users, get a bunch of money from
investors, and cross your fingers that maybe one day you can figure out how to
actually make the thing profitable. And if it doesn't work out? Well it's
somebody else's problem right?

It's sort of funny that, as long as the investor community all agree on $X
valuation -- you NEVER need to make a single dollar in profit because the next
guy in line will cover your "loss." Or finally some giant will buy you out to
acquihire or get rid of competition.

Probably sounds like I'm just a hater and ranting, but just my 2 cents.

~~~
mbesto
Precedence.

Facebook, Google and LinkedIn already proved it. No investor wants to feel
dumb that they didn't invest their money in the "thing that looks just like FB
and Google" even if the business model isn't a complete 1:1.

~~~
harryjo
Bonds are not stocks. There's no upside to a bond beyond "getting your money
back with the agreed interest"

------
clarky07
Aside from issues from a consumer standpoint, I was actually interested in
testing the advertising for mobile apps. Unfortunately, they don't have an SDK
for conversion tracking. They rely on third parties that charge for the
conversion tracking. This is absurd. Every other advertiser I can think of
provides conversion tracking. Without it, the advertising is worthless. It is
the thing that provides value compared to other advertising mediums.

------
pjc50
Twitter have recieved a _lot_ of flack lately for their poor handling of abuse
complaints. Particularly in relation to #gamergate. I've no idea whether that
makes a difference, but it's worth considering: abuse, like spam, is going to
be a big problem for any communications service.

~~~
ceejayoz
One of the worst aspects is they'll close any issue referring to now-deleted
tweets without any action.

I'm quite certain tweets are soft-deleted and accessible by the abuse team (if
the Secret Service wanted one they'd get it) so it comes across as callous
indifference.

------
dabeeeenster
Do people still take these ratings agencies seriously after what happened 6
years ago?

~~~
danieltillett
When they rate a bond as junk yes. We can be suspicious when they rate some
garbage as AAA, but given the economics of the ratings business when they tell
you something is junk then it probably is.

~~~
bdg
The rating was an unsolicited rating.

> A number of empirical papers have shown that unsolicited ratings are
> significantly lower than solicited ratings, both in the U.S. market and
> outside the U.S

[http://blogs.law.harvard.edu/corpgov/2013/12/29/the-
economic...](http://blogs.law.harvard.edu/corpgov/2013/12/29/the-economics-of-
solicited-and-unsolicited-credit-ratings-2/)

~~~
danieltillett
Sure this is probably the only reason the bonds have been rated as junk. If
Twitter had paid then there is little chance that the quants down in the
basement could say what they really thought.

~~~
icebraining
On the other hand, it's in the rating agency's interest to give poor
unsolicited ratings, to "push" companies into paying for solicited ones.

~~~
danieltillett
This is posible, but I suspect it would work a lot better if the agency has a
quiet discusssion with the CFO before doing the rating. Something like
explaining to the CFO that you can't trust those quants to understand the
sensitivities involved unless they have a framework to constrain their
thinking - if they are left to their own devices they might even say what they
think.

------
fallingmeat
Can someone teach me how to use Twitter? Still don't get it. It's like an IRC
channel for social media professionals, right?

~~~
Avalaxy
There is no _the_ way to use it. But I can tell you about how I use it:

\- I follow a couple of industry professionals and companies to stay up to
date with their updates. As a MSFT developer I follow MSDN, the .NET team, but
also important players like Scott Hanselman and Scott Guthrie. By doing this I
always get the latest updates.

\- I never follow more than 50 people and unfollow everyone who posts too
much... If there are so many tweets that you don't have time to read them,
you're not being effective. Be picky about who you follow. You don't have to
follow your followers in return.

\- I use Twitter a LOT to communicate with people I'd otherwise have no access
to, because I don't have their email or they are too busy answering me through
the company mailbox. Twitter makes everyone (except for celebs) reachable. If
I need some guy at Google who write library X, I just send him a tweet.

\- I use the search to find what people are saying about my product, but
sometimes I also use it to engage with people who are talking about a subject
I'm interested in.

~~~
linkeex
> \- I use Twitter a LOT to communicate with people I'd otherwise have no
> access to, because I don't have their email or they are too busy answering
> me through the company mailbox. Twitter makes everyone (except for celebs)
> reachable. If I need some guy at Google who write library X, I just send him
> a tweet.

That one is a killer-feature right there I've managed to discover lately.
Twitter completely sucks, because if you are just a normal person doing normal
things noone will ever care about you. BUT, in case you're interested in some
very specific topic and the contributing people then you should give twitter a
try...

~~~
danieltillett
Actually this is one of the things that makes twitter so useful. With email
the person can pretend that they didn't get your email ("it must have ended up
in my junk mail folder"), while with twitter it is all public.

------
grandalf
It sounds like Twitter didn't have enough cash to finance its growth and that
the IPO didn't result in enough cash available to do whatever needs to be
done.

So if you put the information together:

The IPO was triggered b/c some investors wanted to get out. The public funding
was insufficient to fund whatever initiatives are going on. The debt issue was
an attempt to get capital asap. The rating could have been easily predicted
and so it must be the case that Twitter's management chose to take the hit of
the bad PR in exchange for the cash provided by the debt. This suggests that
Twitter expects to be in for some tough times ahead.

All this is probably very rational decision making and is probably the best
bet the company has in an increasingly competitive market.

------
ColinCera
I've never understood why Twitter doesn't run _way_ more ads than they do.
When I view my Twitter timeline in a browser there's an enormous amount of
unused space on both sides of the timeline and it would not bother me one
little bit if they displayed some ads in that space. In fact, it would be much
less distracting/detracting than sticking sponsored tweets into the middle of
my feed.

Like most people, I find ads kind of annoying, but Twitter's an unusual case —
I would be 0% less inclined to use Twitter if they put some ads in that
totally unused space.

Twitter might lose approximately .01% of their users if they ran ads, but
they'd be making billions in profits.

~~~
matthewmacleod
What proportion of Twitter users access it through the browser, though? I
suspect a lot of users (especially heavy ones) don't use it all that much.

That means ads need to be inserted into the stream, which is much more
annoying. I'd argue that there are already too many, myself…

~~~
ColinCera
You're right. Now that I think about it, the majority of Twitter user probably
happens on phones and tablets, where there is no out-of-feed real estate for
advertising, and a smaller percentage of people on desktops use a native app
instead of the browser site.

So the revenue potential is probably not as much as I'd imagined.

And I fully agree that I don't want to see an increased number of sponsored
tweets inserted in my feed.

------
MisterMashable
Interesting how Peter Thiel who froze $45,000 of assets of Facebook competitor
Diaspora* has taken a special interest in bad mouthing Twitter, call them
"horribly mismanaged" etc. It's very clear he wants Twitter to fail. Peter
Thiel influenced the debt downgrade with his comments. Knowing how the world
works Thiel may very well have called up an analyst and played some dirty
tricks as in the case of Diaspora*.

~~~
k-mcgrady
I doubt ratings agencies care what Peter Thiel says about anything.

------
jvagner
Twitter has become a dumping ground for what used to be RSS. The "twitter"
traffic is now really over at Instagram. Instagram needs to upgrade their
product mix (multi- accounts), but geeks and news organizations are propping
Twitter up, but it's not a general conversation or personal broadcasting tool
anymore.

~~~
0x0
It doesn't even really work well for that, what with its max 2k following
limit. :(

------
debacle
I really don't know how anyone didn't see this coming. The Twitter IPO was the
nail in the coffin for the company. It was wishful thinking that they would
ever become profitable with their current model.

------
ErikAugust
Twitter is an elegant and open platform. It is what you make it. And over the
course of Twitter’s relatively short existence, millions of users have
creatively found ways to extract utility from it. Businesses use Twitter to
grow – without paying the service anything. Businesses have also been built
directly on top of the service.

So why can't Twitter take these and go directly to their users with them as
use case options?

My thoughts, continued:
[http://erikaugust.com/thoughts/twitter/](http://erikaugust.com/thoughts/twitter/)

~~~
sergiosgc
> Twitter is an elegant and open platform.

It's not open. After killing off lots of development happening in their
platform with the token limit decision, they effectively shut off that avenue.
No sane developer will base his bread and butter on Twitter now.

Some effects of that decision were positive, like increasing engagement with
advertising. Lots were negative, namely non competition on mobile app space,
or lack of innovation in the use of the platform.

I personally think it was a short term vision move, that effectively killed
twitter in the long term. It'll never evolve as much as it needs to survive,
now that it lost its developer ecosystem.

------
getdavidhiggins
I just wrote this as a response to the BBC article:

[https://thoughtstreams.io/higgins/thoughts/6764/](https://thoughtstreams.io/higgins/thoughts/6764/)

Twitter's self immolation

I just read BBC's article about Twitter not being able to make a profit. It's
the classic 'investor story time' narrative where Twitter now have to scramble
to make money via whatever means necessary - even if that means harming the
product. Example of harm recently are:

• Many spinoff projects not related to Twitter, like Music, Flight, and a
myriad of other, quite splintered attempts at adding new features.

• ADs getting more aggressive; instead of a simple injected AD in the timeline
- now we have newsletters and 'sign up' with the email you have registered
with Twitter. Twitter cards are also being used to show rich media for
'partnered' brands. A far cry from small, polite injected ADs. Very few people
make time for watching video in a Twitter reading session.

• A constantly shifting API that developers cannot trust, and have to relearn
constantly. On top of sunsetted in-house features. Remember Twitter Anywhere?
I feel like Twitter Widgets will vanish over-night and without much warning
too. It turns out; I rely on these solutions very heavily. The 'very little
adoption' argument is used to sunset these features, and it's a terrible
argument, because it destroys webs of trust with developers.

What Twitter must realize is that Twitter is plumbing. I know that
microblogging existed before it, and there are countless (better) alternatives
like app.net - but things like app.net are geek toys just like Diaspora. Sure
- the greybeard hackers love services like that - but it's not especially for
the masses, and also services like Diaspora/ADN will never achieve the status
of 'plumbing' (despite app.net's tagline as a platform for Apps.). Twitter got
there first, and they must realize this.

So Twitter should give us back the API we all grew to love, and not deprecate
it to impress investors. It needs an eco system. It's what made Twitter take
off in the first place. When I first joined Twitter in 2007; it was classic
bottom up technology, built by the people and the API evangelists. The recent
bait-and-switch to 'consumer product' annoyed a lot of people. It's time to
see whether Twitter can do another bait-and-switch and go back to its roots.

If they manage to achieve this bait-and-switch - it will be monumental. It
will be big news. And I will not be muting Twitter in my timeline for it.

~~~
spindritf
Aren't cards available to everyone, not just partnered brands? Do they get
different, more powerful cards?

------
anonbanker
is this how the market is reacting to Twitter's convertible note offering?
very interesting.

------
Cakez0r
I wonder if they'd accept an acquisition offer from Google or Facebook!

------
gushaprints
I think they should keep the 150 characters as a limit for website

------
bdg
The article feels like a slam against them.

> Twitter reported a ... 7% fall in timeline views per user

> -a 23% growth in its user base in the third quarter.

... I can't tell if that's a net volume increase or decrease.

> Twitter shares gave up most of the 7% gain made on Wednesday

If this is relevant to you, you're a day trader, and this would be very old
news by this point. This is misleading as they're talking about the day-to-day
price right next to the percent change over the year.

> Its shares have lost 37% so far this year.

That's not true.
[http://www.google.com/finance?q=NYSE%3ATWTR&ei=afBlVNPuCsXmr...](http://www.google.com/finance?q=NYSE%3ATWTR&ei=afBlVNPuCsXmrQGA94CQDg)

They're down 3.87% (1.61 points) from IPO to now (less than 12 months). Even
if I was confused and picked their performance as a "year to date" it would be
23% down. However, if I cherry pick my data and find the high point from the
short-lived spike at a very specific date 10 months ago (not a year), their
shares have fallen about 33%. I'm sure it was cherry picked for when "today"
was also.

Basically. I think this is biased junk or a financially literate reporter.

Frustratingly, I can't find the report on S&P's site.

[http://www.standardandpoors.com/en_US/web/guest/ratings/sear...](http://www.standardandpoors.com/en_US/web/guest/ratings/search/-/search/searchType/T/searchTerm/twtr?searchText=twtr)

After some digging into actual financial news outlets we can discover this is
actually an unsolicited rating which are famous for being poorly rated.

[http://www.streetinsider.com/Credit+Ratings/S%26P+Assigns+Un...](http://www.streetinsider.com/Credit+Ratings/S%26P+Assigns+Unsolicited+BB-+Rating+to+Twitter+\(TWTR\)%3B+Sees+Ongoing+Growth+in+MAUs,+Revenue/10011143.html)

~~~
jacquesm
> Its shares have lost 37% so far this year.

I think they simply meant 2014, and then it is more or less accurate.

Jan 1st to now is not a pretty comparison. Whichever way you interpret the
figures they definitely not look good.

~~~
thrownaway2424
Their share price is nearly irrelevant to success since they can easily raise
money through debt. They went to markets asking for 1.3 billion and offering
nothing in return and the market said "why not 1.8?" If they were raising
money through secondary equity offerings the their share price would matter.
This debt rating also doesn't matter except to the chumps who own the debt.
Twitter already has the money in the bank and 1.8 billion is a substantial
amount of capital any way you look at it.

~~~
jacquesm
Oh, absolutely. There is no substance here, but it _looks_ bad, and in the
stockmarket that's really all that matters. That's why you can have CEOs from
companies with solid fundamentals ousted when the company has two bad quarters
in a row. It's a ridiculous system that focuses on the short term only.
Twitter raised money with the express intent of investing it, not to hoard it.

------
uhhok
The comments here are just so funny. HN crowd once again trying to defend a
useless product. I guess if twitter goes down the drain, it doesn't look good
for your own products either.

~~~
Igglyboo
I get plenty of use out of twitter, I'm sure all the millions of users also
get use out of it or they wouldn't use it.

