Facebook has walked out on talks to buy Twitter saying $500m was too much. Some will say that maybe it is for a service that makes no money - but I'm still convinced it has much potential.It's a little amusing for Facebook – over valued at some ludicrous $15bn – to walk away over issues of price. It would have bought Twitter in stock and its stock is just not worth what it once was. It was the failure to agree how much its stock is worth now, in this new economic reality, that killed the deal. As the New York Times says the values of many net firms are more akin to a lottery than anything else with investors and buyers betting on the future. The same, of course, happened to Facebook when two years ago when Yahoo! walked out on a deal to buy it over issues of price. Mark Zuckerberg must be counting his lucky stars that Yahoo! did that otherwise he would be lumped in with the whole train wreck that is Yahoo!.
At the time Yahoo! didn’t think Facebook was worth more than $1bn. This was of course before Facebook went stellar. Hindsight is a wonderful gift and so clearly we can see that was a mistake. The deal could have transformed Yahoo! and its fortunes. Too late for that one, that ship has clearly sailed.
I'm pretty sure the same is true of Facebook's failure to bag Twitter. Okay it isn't a transformational deal, but I do think it shows a failure of ambition on Facebook's part, which seems stuck in some kind of comfort zone. It is tweaking with things when maybe it should be...oh I don't know Twittering?Twitter's management in talks first reported by AllThingsD blog clearly wanted more and believed that the micro blogging service was more than the 3.33% of Facebook stock that was on offer. Facebook has to realise it is no longer worth $15bn (based on Microsoft's $240m investment).
Is Facebook right to walk away from takeover talks with Twitter?
In recent weeks I have heard more and more cool uses of Twitter, particularly on the customer service front, for Twitter like 02 and Comcast using it really well. But these are more like personal experiments feeling the way forward than anything else. That said, I think that process is only going to accelerate…of course it might also come apart at the seams and next year we will be left going Twitter? Oh yeah I used to use that.I'm sure it is more likely to be the former rather than the latter. It almost feels like in the case of Twitter something that is ready to be plugged in to something else. I don't know what. If I did I would be on it. It could have been Facebook, but as that door closes it opens for someone else. Any bets?
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Gordon Macmillan
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