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Comment by mc32 | Hacker News Reader

I can imagine this turning out the way the Yahoo! thing went down last time. They wanted too much everyone bowed out (MS as well) and now where are they? Firesale which may or may not go through.

With Goog and maybe Disney bowing out maybe other parties are waiting for a firesale to pick them up.

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The difference is that Yahoo actually made real money and had valuable assets other than its core offerings (Alibaba).

Twitter is just an overgrown, overfunded startup without an obvious path to revenue strong enough to support its operations and growth.

Twitter makes ~$2 billion in revenue. Their market cap and funding may not fit, but they're a pretty huge company.

Huge waste of money is more like it. Call me an old-fashioned businessman, but $2 billion in rev still sucks when the end result is a $500MM loss. Even at that scale, $500MM is no small gap to close, especially when your primary competitors are wildly superior and better platforms for your core business are emerging all of the time (snapchat, for instance).

Scaling up a weak business to epic heights doesn't magically make it a success for shareholders. Initial investors, sure.

Two billion in revenue is a lot less impressive when you consider that they spent half a billion more than that in the process.

Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.

Particularly if what you do with the other $0.50 is build something that's only valuable because of the group behavior of a few billion fickle users who will almost certainly desert you at some point in the future for something newer and shinier.

But nice work if you can get it in the meantime.

    Generally, people like their businesses to reliably turn $1 into $2 over time, not turn $2.50 into $2 over and over.

I genuinely laughed out loud that you qualified that with "generally." Some quality dry sarcasm if I've ever heard it.

> a few billion fickle users

If Twitter actually had a few billion users it would be pretty valuable. IIRC it has just a few hundred million.

Maybe the tax losses would be worth something, but I don't consider it likely someone to pay $15.2bn for Twitter. Heck, even $5bn is still a lot of money to pay for a business that's losing $500mm a year.

Could you fire two thirds of all the staff and make it profitable?

I should add that when I said "overgrown startup," the implication wasn't that it's a small company. I'm saying that they've operated at a loss for all of their existence (like many SV startups) and never turned that around. Scaling while failing, and they hoped that another round of investment (IPO) would give them time to change that.

Are you referring to Microsoft's 2008 offer to acquire Yahoo? That offer amounted to $31 a share, YHOO today is trading at $43-44 a share.

You have to be careful quoting offer prices. Microsoft's 2008 offer for YHOO today would be ~$46.80/share.

It is best to look at market cap to determine value - Microsoft's 2008 offer was $44.6B; Yahoo's current market cap is $41.65B.

The discrepancy from then to now comes from the number of shares outstanding. There are fewer outstanding YHOO shares today than there were in 2008.

Did you also adjust for inflation in there? If not, there's an additional ~10% that can be adjusted for. $44.6B in 2008 would be $49.84B in 2016 USD, an even wider gap.

But there are fewer shares because yahoo "returned" north of $10B to investors through share buybacks. Not exactly sure how that should be accounted for, but I think relevant to the calculation.

Indeed, for a long-term "buy & hold" investor, the share price is much more meaningful than market cap because of the buybacks.

Did that offer include the AliBaba stake?

>YHOO today is trading at $43-44 a share

What % of that is their core business that MS offered to buy?

Yes, for how much now, ~5B. And what are its prospects? It's only been downhill for Y! since then. Marissa did a decent job trying to salvage it after nearly half a dozen CEOs prior to her vacillated, but it just never got its bearing and I fear similar is the case for Twttr.

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