Published: May 5 2009 15:05 | Last updated: May 5 2009 23:11
Twitter is a phenomenon, moving in recent months from micro-blogging curio to the acceptable face of online self-promotion. As it pushed into the mainstream, visitors to the site more than doubled in March from the year before, according to Comscore. But, as every street performer knows, it is one thing to gather an audience, it is quite another to keep them there when it is time to pass round the hat.
So it is hard to credit speculation that a bid in the several hundred million dollar range is imminent, with the list of potential buyers extending to every large, cash-rich technology company. For some it would make no sense. Apple prefers its own closed systems to open-to-all applications such as Twitter. Even for others, a realistic valuation case is hard to construct.
The problem is that Twitter, which employs fewer than 40 people, has no revenues. The site is free, and, at present, carries no advertising. Even if it can insert ads without compromising its simple appeal, social networks have so far proved to be a low value proposition for advertisers. Twitter may anyway be closer to a communication service such as online e-mail, not historically a viable standalone business. Alternatives, such as charging for premium access, require heroic assumptions for Twitter to be an attractive investment – both on growth and on what users will pay for hitherto free services.
Arguments for a billion dollar price tag then rest on the sum required to part the founders from their project, or what might be achieved in a bidding war. Indeed, the broader point is that the Twitter valuation debate only occurs because Microsoft,Google, Apple and others all sit on large and unproductive piles of cash. Investors would be better served making sure they use this money wisely.
Source: http://www.ft.com/cms/s/2/c4e9a934-397d-11de-b82d-00144feabdc0.html
Other great sources of info. http://globalitandbusinessnews.blogspot.com/ http://globalbusinessnews.posterous.com/ http://kxlsyd.posterous.com/ http://twitterpulsepoll.posterous.com/ @globalnewsfeed - https://twitter.com/globalnewsfeed @pulsepoll -https://twitter.com/pulsepoll @kxlsyd - https://twitter.com/kxlsyd
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