
Twitter shares drop as Salesforce reported to be out of the bidding process - obi1kenobi
http://www.marketwatch.com/story/twitter-shares-tank-as-salesforce-reported-to-be-out-of-the-bidding-process-2016-10-14
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niftich
I love these 'rumors' and using terms like 'walked away' juxtaposed against
one another.

Wouldn't it be beneficial to start all sorts of rumors about big players
wanting to buy Twitter and then when every single one of them says they're in
fact not interested, the value plunges and the actual interested buyer can
pick them up on the cheap? Is this legal, provided no insider info was used?
Doesn't this happen all the time?

~~~
siculars
This. I have no doubt one of the aforementioned suitors, or some other, will
conveniently step forward and strike a deal with Twitter in the $20-30 per
share range.

~~~
jowiar
How do you justify that price, though? It involves a whole lot of growth that
isn't really there. Google and FB are probably the only companies that could
turn Twitter profitable, but probably only at a point that justifies a sale
price of around $15.

~~~
harryh
A lot of people think that twitter could relatively easily be made profitable
by significantly cutting engineering staff.

[http://brontecapital.blogspot.co.uk/2016/10/some-comment-
on-...](http://brontecapital.blogspot.co.uk/2016/10/some-comment-on-twitter-
buyout-rumours.html)

~~~
duaneb
Yea, people miss the fail whale.

~~~
harryh
The vast majority of current twitter engineers have nothing to do with keeping
fail whales at bay.

~~~
duaneb
Isn't that the whole point of hiring engineers? To keep your service running?
It's not going to maintain itself.

~~~
harryh
_Isn 't that the whole point of hiring engineers?_

No. If all twitter cared about was keeping the existing service running they
could do it with 1/10th the current technical staff.

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JumpCrisscross
Twitter's payroll (to say nothing of its stock-based compensation expense) is
massively bloated. Slashing staff isn't a popular play for a strategic
acquirer. Too much risk the bad will leaks to your core business.

This is a textbook private equity deal. Twitter's habit of ringing in the year
with $500MM losses could be single-handedly cut with a 2/3rd staffing
reduction (which costs lots in payroll and $800MM in stock-based compensation
expense). How much of Twitter's $2bn in revenue would evaporate post-cuts.
Over half? Still leaves $750MM of pre-tax income before R&D ($800MM in the FYE
2015). Cut that in half, say you lose a further 25% of revenues, and you still
have $160MM before taxes yielding $100MM of net income. That's worth $1bn to
$2.5bn.

If you can grow that to $500MM over 4 or 5 years, you could sell it for ~20x.
Discount back at 10% or 20% and you have an optimistic valuation of $4 to
$7bn.

Twitter's trading at $12bn. I suppose I'd bid $5.70 per share and be willing
to entertain someone talking about $10 a share. I'd similarly be furious at
the CEO of a company I own publicly speaking about buying the thing for twice
that, as Benioff was.

~~~
the_watcher
It's definitely an obvious one to PE. My brother works at a PE firm, and it's
pretty commonly discussed (not as something they're actually going to do, but
as a thought exercise, since it's got lots of characteristics that scream PE).
The problem is that Twitter almost certainly won't take an acquisition for
less than it's currently trading, which rules out a lot of PE.

~~~
JumpCrisscross
> _Twitter almost certainly won 't take an acquisition for less than it's
> currently trading_

Would almost _certainly_ need to be, if not hostile, done without management's
coöperation. Why would they kill their golden goose?

~~~
the_watcher
Unrelated to the content, but your spelling of cooperation sent me on a little
tangent, where I found this, and found it interesting:

[http://www.thewire.com/entertainment/2012/04/we-resist-
furth...](http://www.thewire.com/entertainment/2012/04/we-resist-further-
cooperation-cooperation/51631/)

~~~
girvo
Which I thank you for; the not-umlauts in The New Yorker have been a slightly
puzzling thing to me, up until now!

------
ChuckMcM
[The conspiracist spam in the comments section is funny]

I find the whole Twitter story fascinating on several levels but most
interesting as a non-business. I've always been a bit curious how they would
make money on it, there are clearly lots of information dynamics that are
valuable, but the whole "this is how millenials hear about things" seemed like
it fit nicely into a media slot where it 'front ran' the headlines. Amazed
that Dorsey and company have not been able to make it work.

------
jakozaur
I don't see how Salesforce could get much value out of Twitter. They could get
it out of LinkedIn (sales people use LinkedIn sales navigator a lot), but
likely not at the price Microsoft has paid for LinkedIn.

~~~
netik
Well, they bought Yammer which at the time was a direct Twitter clone (but
made for small businesses.)

You know what would make for a better acquisition? Amazon.

Twitter has tons of customers, tons of dark fiber, lots of internal cloud
technologies (mesos, etc.) and a huge international peering network of IP
routers.

Amazon needs a way into social and real time news.

~~~
vosper
> Amazon needs a way into social and real time news.

Why does Amazon need this?

~~~
the_watcher
They don't _need_ it, but I can see why they'd perhaps want it.

~~~
walterbell
Amazon has Twitch, a payments product and invests in original content for
streaming video. Twitter has been experimenting with video streaming, e.g.
sports.

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capkutay
Can anyone comment on Salesforce future as a company? It seems like they've
topped out as a sales tool. I doubt people are going to use their 'IoT Cloud'.

~~~
gjolund
SalesForce is more brand than product, it is the type of product you start
using after your CEO comes back from golf with his other CEO buddies.

~~~
the_watcher
I say this as someone who can't stand using it, but that's not why it's so
widely used. It's widely used because nearly every experienced salesperson
knows how to use it already. So when scaling a sales team and trying to
minimize friction and get them producing as soon as possible, it can make a
lot more sense than another CRM, even if you like it more.

~~~
toomuchtodo
It's the AWS of the sales world.

------
jey
That 6% pop for Salesforce is hilarious.

~~~
slantedview
Well played on their part.

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obi1kenobi
TWTR today:
[https://www.google.com/finance?q=twtr](https://www.google.com/finance?q=twtr)

~~~
toomuchtodo
Already below $17/share. Ouch.

~~~
rch
They were below $16 back in July...

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danieltillett
Twitter will be bought, but only when the price comes down quite a bit more.
Payroll will be cut massively and it will become quite a nice little cash cow
for someone.

~~~
the_watcher
It won't sell unless it's bought at premium.

~~~
danieltillett
That is true, but the premium is a price lower than today. Twitter is a great
business, but not one that can support the current share price.

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1024core
Called it when the news broke:
[https://news.ycombinator.com/item?id=12649844](https://news.ycombinator.com/item?id=12649844)

It'd be interesting to see who unloaded their TWTR holdings.

~~~
xufi
Interesting I was surprised this happen so quick. I figured a few other
companies were interested in Twitter (Google/Spotify/Pinterest) but lets see
what happens

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gjolund
Called it.

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basch
Penske Media should buy along with some sports blogs.

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spriggan3
Twitter is valuated $10B but it's hard to see Twitter selling for more than
Yahoo. It's a tool that might be useful for a tiny part of internet users ,
marketers, journalists and drama kings/queens but frankly for most of us
Twitter is useless, worse it is actually dangerous as it has ruined careers
and was used to launch witch hunts or falsely accuse people of sexual crimes.
I'm not touching that toxic platform with a ten foot pole.

