$16bn Twitter price for potential bidders

Salesforce.com and other companies eyeing Twitter Inc may pay more than $16 billion to get their hands on the social-media company’s valuable data.

But they’ll also inherit challenges, including management turmoil, lacklustre growth, and an unsolved identity crisis.

While it remains a destination for conversation among influential people, Twitter would be tough to digest. Chief executive officer and co-founder Jack Dorsey has another CEO job at Square and may not come along with an acquisition.

Then there’s the lack of growth — the reason the company is said to be considering a sale in the first place.

Twitter’s user base has stagnated in the US for six straight quarters. 

Advertisers aren’t spending as much as expected, mostly because they can’t justify buying more ads if the audience isn’t growing.

The company is also in the midst of an identity makeover that would turn it into more of a media company than a technology player.

Twitter still has great potential — elections run on streams of tweets, millions still follow stars like Kim Kardashian, and citizens still use the service to protest oppressive regimes around the world. 

However, it hasn’t turned that into a broader audience, even as Facebook, Instagram, Snapchat and others take on similar roles.

The company is trying to change that with a new, content-heavy strategy. 

It signed a deal with the National Football League to stream live video of Thursday night games alongside tweets about them, and is doing the same with other sports, political events and entertainment.

With new applications on streaming services such as Apple TV, Twitter will display the content video-first to attract new users, without the confusion of setting up an account and deciding who to follow. 

Any company acquiring Twitter will take on this strategy, with little evidence that it is reviving user growth.

Based on Microsoft’s agreement to buy LinkedIn, Twitter is worth $16.7 billion (€14.89bn), excluding cash, Bloomberg Intelligence estimated. 

Twitter share gains on Friday left the company with a market value of $16bn.

Salesforce.com would be buying a consumer-facing service with unique challenges — such as monitoring hate speech and fighting state censorship — that a corporate software company rarely handles. 

Despite that, Twitter may be attractive because it has data on the tweets, followers and other connections of influential professionals and corporate marketing departments.

Still, some Salesforce analysts don’t want it to bid. Its shares fell 5.6%to a six-month low on Friday when news of its interest first emerged. Owning Twitter would change the focus of Salesforce, which already has a mixed track record with social media, some said.

It’s unclear where else interest could come from, though people familiar with the situation said several companies have had informal talks. 21st Century Fox Inc, Comcast Corp, Time Warner Inc and AT&T Inc don’t want to buy Twitter, according to people familiar with those companies’ strategies.

For Alphabet Inc.’s Google division, Twitter would fill a social-networking hole left gaping when Google Plus, a rival to Facebook, failed.

Bloomberg


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