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Twitter all a flutter after takeover talk

Twitter shares surged 21% over the weekend on talk of a possible takeover by Salesforce or Google.

Global news organisation CNBC stated that Twitter had received expressions of interest from several media and technology companies and it was likely it would receive a formal bid in the next three months.

It inferred that Twitter would be crazy to ignore such bids due to its disappointing financial results and a 30% fall in market value over the last year. It added just three million users to a total of 313 million in the last quarter and it is losing advertising revenue to Instagram, Snapchat, and other messaging rivals.

The increased share price puts the value of Twitter at somewhere north of US$20-30 billion.

Recode says, “As a fiduciary duty, the board of Twitter must consider the options and is doing so, although informally. And possible buyers also have to check in, largely because Twitter is one of the few interesting and impactful digital platforms around. It might be limping, but it’s not lame (see Yahoo for that). And its mass of data, advertising potential, mobile video opportunity and real-time news capabilities make it a must-look.”

Other sources say that the usual suspects [for a takeover] include Apple, Microsoft, Facebook, Disney, News Corp/Fox and even Telcos like Comcast and Verizon. SnapChat has been mentioned, but it is a minnow that may not be able to raise the capital – it would need a market cap of at least double Twitter’s value to be a serious suitor.

While Twitter is a household name, it has failed to adequately monetise its business and, according to eMarketer, has achieved just over 1% of the digital-ad spend. Twitter makes a substantial amount of its revenue from data mining its billions of tweets. It is looking at adding value through live streaming of events, but that is fairly much a “me-too” effort – it is done better elsewhere.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!