Twitter shares drop as Salesforce reported to be out of the bidding process | Hacker News Reader

Twitter shares drop as Salesforce reported to be out of the bidding process

marketwatch.com

57 pointsobi1kenobi55 comments

I love these 'rumors' and using terms like 'walked away' juxtaposed against one another.

Wouldn't it be beneficial to start all sorts of rumors about big players wanting to buy Twitter and then when every single one of them says they're in fact not interested, the value plunges and the actual interested buyer can pick them up on the cheap? Is this legal, provided no insider info was used? Doesn't this happen all the time?

Yeah, what you describe is illegal - it's market manipulation.

Being illegal and getting caught are two very different things.

This. I have no doubt one of the aforementioned suitors, or some other, will conveniently step forward and strike a deal with Twitter in the $20-30 per share range.

I think you're right, but $20 - $30 is waaay too big an estimate here. I think its more like $20-24.

...maybe a foreign company at this point...

How do you justify that price, though? It involves a whole lot of growth that isn't really there. Google and FB are probably the only companies that could turn Twitter profitable, but probably only at a point that justifies a sale price of around $15.

A lot of people think that twitter could relatively easily be made profitable by significantly cutting engineering staff.

http://brontecapital.blogspot.co.uk/2016/10/some-comment-on-...

Yea, people miss the fail whale.

Pretty sure that Google or Facebook could handle the scale Twitter operates at without the same headcount.

If I had google behind me, I could also leverage ridiculous technology. Both are larger than I am (and twitter is), so this is not surprising.

The vast majority of current twitter engineers have nothing to do with keeping fail whales at bay.

Isn't that the whole point of hiring engineers? To keep your service running? It's not going to maintain itself.

Isn't that the whole point of hiring engineers?

No. If all twitter cared about was keeping the existing service running they could do it with 1/10th the current technical staff.

I will bet you $500 that this doesn't happen within the next 90 days.

its illegal if you short said stock prior to starting the rumors, and then profitting from the outcome. "pump and dump".

Technically, a "pump and dump" is the opposite of what's being described here. This would be a "poop and scoop".

http://www.investopedia.com/terms/p/poopandscoop.asp

thats awesome. I didn't know there was a name.

Probably, under SEC Section 9, but its hard to prove. You'd have to show that specific people started the rumors, rather than merely repeated them, and a chain from them to those that profited.

This is rumored to be what is going on.

Fake acquisitions created for the purpose of driving up share price, during a time period when twitter employees are allowed to sell.

Got to allow twitter employees to cash out somehow.

This all happened during a time when employees were _not_ allowed to sell stock.

Is there a rolling window?

Yes, there was a stock sales window when I worked there and I assume there still is now.

Most publicly traded companies have lockout periods if you have access to "insider information." Given that Twitter is (was) fairly transparent about company financials, this is probably still true.

Twitter employees can't currently sell stock? I was unaware of this.

They can only trade one month out of three. Specifically, they can trade immediately after quarterly earnings.

This is pretty common amongst similar companies.

Twitter's payroll (to say nothing of its stock-based compensation expense) is massively bloated. Slashing staff isn't a popular play for a strategic acquirer. Too much risk the bad will leaks to your core business.

This is a textbook private equity deal. Twitter's habit of ringing in the year with $500MM losses could be single-handedly cut with a 2/3rd staffing reduction (which costs lots in payroll and $800MM in stock-based compensation expense). How much of Twitter's $2bn in revenue would evaporate post-cuts. Over half? Still leaves $750MM of pre-tax income before R&D ($800MM in the FYE 2015). Cut that in half, say you lose a further 25% of revenues, and you still have $160MM before taxes yielding $100MM of net income. That's worth $1bn to $2.5bn.

If you can grow that to $500MM over 4 or 5 years, you could sell it for ~20x. Discount back at 10% or 20% and you have an optimistic valuation of $4 to $7bn.

Twitter's trading at $12bn. I suppose I'd bid $5.70 per share and be willing to entertain someone talking about $10 a share. I'd similarly be furious at the CEO of a company I own publicly speaking about buying the thing for twice that, as Benioff was.

It's definitely an obvious one to PE. My brother works at a PE firm, and it's pretty commonly discussed (not as something they're actually going to do, but as a thought exercise, since it's got lots of characteristics that scream PE). The problem is that Twitter almost certainly won't take an acquisition for less than it's currently trading, which rules out a lot of PE.

> Twitter almost certainly won't take an acquisition for less than it's currently trading

Would almost certainly need to be, if not hostile, done without management's coöperation. Why would they kill their golden goose?

Unrelated to the content, but your spelling of cooperation sent me on a little tangent, where I found this, and found it interesting:

http://www.thewire.com/entertainment/2012/04/we-resist-furth...

Which I thank you for; the not-umlauts in The New Yorker have been a slightly puzzling thing to me, up until now!

[The conspiracist spam in the comments section is funny]

I find the whole Twitter story fascinating on several levels but most interesting as a non-business. I've always been a bit curious how they would make money on it, there are clearly lots of information dynamics that are valuable, but the whole "this is how millenials hear about things" seemed like it fit nicely into a media slot where it 'front ran' the headlines. Amazed that Dorsey and company have not been able to make it work.

I don't see how Salesforce could get much value out of Twitter. They could get it out of LinkedIn (sales people use LinkedIn sales navigator a lot), but likely not at the price Microsoft has paid for LinkedIn.

Well, they bought Yammer which at the time was a direct Twitter clone (but made for small businesses.)

You know what would make for a better acquisition? Amazon.

Twitter has tons of customers, tons of dark fiber, lots of internal cloud technologies (mesos, etc.) and a huge international peering network of IP routers.

Amazon needs a way into social and real time news.

> Amazon needs a way into social and real time news.

Why does Amazon need this?

They don't need it, but I can see why they'd perhaps want it.

Amazon has Twitch, a payments product and invests in original content for streaming video. Twitter has been experimenting with video streaming, e.g. sports.

Can anyone comment on Salesforce future as a company? It seems like they've topped out as a sales tool. I doubt people are going to use their 'IoT Cloud'.

They've been making inroads into the marketing side of things for a while now with their acquisition of Buddy Media, ExactTarget, etc.

https://en.wikipedia.org/wiki/Salesforce_Marketing_Cloud

All the big analytics/ad tech/ESP players are trying to own this space, and unfortunately none of them do it very well because it is largely bolt-ons of various products cobbled together into a frankenstein "marketing cloud" that they can then charge ridiculous enterprise services fees to setup and maintain, and has tons of vendor lock-in (the real long-term play).

Personally, while there are advantages to consolidating in some cases (the DoubleClick search/display stack works well for many as one example), I worry that many of these companies are losing focus on their core competency as a result.

SalesForce is more brand than product, it is the type of product you start using after your CEO comes back from golf with his other CEO buddies.

I say this as someone who can't stand using it, but that's not why it's so widely used. It's widely used because nearly every experienced salesperson knows how to use it already. So when scaling a sales team and trying to minimize friction and get them producing as soon as possible, it can make a lot more sense than another CRM, even if you like it more.

It's the AWS of the sales world.

They are entrenched in enterprise. When all your systems (sales, marketing, ERP, finances, support, HR etc) are wired up to Salesforce workflows and automation, it's hard to leave the platform.

That 6% pop for Salesforce is hilarious.

Well played on their part.

TWTR today: https://www.google.com/finance?q=twtr

Already below $17/share. Ouch.

They were below $16 back in July...

Twitter will be bought, but only when the price comes down quite a bit more. Payroll will be cut massively and it will become quite a nice little cash cow for someone.

It won't sell unless it's bought at premium.

That is true, but the premium is a price lower than today. Twitter is a great business, but not one that can support the current share price.

Called it when the news broke: https://news.ycombinator.com/item?id=12649844

It'd be interesting to see who unloaded their TWTR holdings.

Interesting I was surprised this happen so quick. I figured a few other companies were interested in Twitter (Google/Spotify/Pinterest) but lets see what happens

Called it.

Penske Media should buy along with some sports blogs.

Twitter is valuated $10B but it's hard to see Twitter selling for more than Yahoo. It's a tool that might be useful for a tiny part of internet users , marketers, journalists and drama kings/queens but frankly for most of us Twitter is useless, worse it is actually dangerous as it has ruined careers and was used to launch witch hunts or falsely accuse people of sexual crimes. I'm not touching that toxic platform with a ten foot pole.

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