Business

Twitter considering its buyout under pressure?

10 Sep 2016 | By Ramya

Adding to the recent speculation that Twitter would be taken over, the company's Board of Directors are reportedly discussing strategic options including a potential buyout option.

The online service is facing a disappointing user growth, pressure from Google and Facebook apart from Snapchat's threat.

All these factors could push Twitter to sell some of its assets or lead it onto the auction block.

In context: Is Twitter up for sale?

IntroductionWhat is Twitter?

Twitter is a free, online social networking, microblogging service that enables users to broadcast and read short 140-character posts known as "tweets".

It is available on multiple platforms and devices; users can follow other users.

Twitter is headquartered in San Francisco and has over 25 offices globally.

It was launched by Jack Dorsey, Evan Williams, Biz Stone and Noah Glass in July 2006.

2013-16Twitter rapidly gained worldwide popularity

Twitter rapidly gained worldwide popularity and went public on 7 Nov'13.

In 2014, its user growth slowed; it lost $578 million, and faced a severe backlash from investors.

In Jan'16, four top executives left the company, following which user growth dropped.

In both Q1 and Q2, Twitter reported an increase in user base and generated revenue of $595 million and $602 million respectively.

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10 Sep 2016Twitter considering its buyout under pressure?

Potential candidates to buy Twitter

Potential BuyersPotential candidates to buy Twitter

There have been some media reports on potential candidates to buy Twitter over the past few months.

The list of such candidates included private equity firms, telecom players, media organizations like News Corp, and tech giants like Microsoft, Apple, Facebook, Google, and Amazon.

However, rumor has it that Google is considering the purchase as a part of expanding Alphabet's reach through social media.

Anticipated price of acquisition

If Twitter is seriously considering selling itself, it might struggle to find a suitable buyer for the anticipated acquisition price is high. Twitter's cost is expected to be over $18 billion - quite high for a company with user growth issues.

Toughest PhaseThe toughest phase since Twitter's inception

According to reports, Twitter is currently going through the toughest phase since its inception.

The investors welcomed founder Jack Dorsey's return to the helm as the CEO; however, he hasn't been able to mitigate the company's problems.

Similar to the company's 8% workforce reduction in 2015, another set of layoffs is likely on the cards; it currently has employee strength of 3,860.

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PerformanceTwitter's shares have tanked over 29%

To add to Twitter's existing woes, the performance of its brand advertising businesses have also not been as expected in the last two quarters due to increasing competition.

Brand advertising and marketing are one the primary contributors to Twitter's revenues.

The company's share prices also plummeted over 29% over the last year.

However, Twitter is reportedly taking several measures to boost its performance.

24 Sep 20164 biggies in the run to buy Twitter

A report recently revealed that big players Google, Microsoft, Verizon and Salesforce were interested in buying Twitter.

It is being speculated that out of the 4, Salesforce may finally take the prize home.

Twitter presently has a "market cap of $13.3 billion" and its trading marked a 22% jump today.

However, Google with the most cash may end up outbidding every other player.

15 Oct 2016Salesforce walks out of Twitter merger talks

The final contender in the race for Twitter's merger, Salesforce.com also announced that it was pulling out.

Twitter's shares plummeted almost 6% after the news broke out.

Its chief executive Marc Benioff said that "we've walked away" because the deal "wasn't a proper fit".

Previously, Disney, Apple and Google's parent Alphabet had walked out of the merger talks leaving Twitter in a lurch.

28 Oct 2016Twitter to cut 9% workforce, to deliver profits

In a bid to deliver profits and move away from driving growth, Twitter has decided to cut-back on 9% of its staff in sales, marketing and partnerships.

Twitter also ended its Vine Video services as their third-quarter results showed dwindling growth and posted another $100 million loss.

Analysts have recommended that the CEO, Jack Dorsey should switch focus to Twitter only, and not Square.

01 Nov 2016Twitter's India head quits

Spelling more trouble for Twitter, the company's India head, Rishi Jaitly resigned.

In a statement he said, "Today, after 4 years of user/business momentum in India and the region, I'm sharing my intention to move on to new opportunities."

Sources said that his last day would be in the end of November and then he would be relocating to the US.

03 Jan 2017Twitter's Chinese head resigns

After seven months of being in charge, Kathy Chen, head of Twitter's China operations has left the firm.

According to her announcement, she chose to leave following a restructure of Twitter's business in Asia.

"Now that the Twitter APAC (Asia Pacific) team is working directly with Chinese advertisers, this is the right time for me to leave the company," tweeted Ms. Chen.