7 ms·

I don't see this deal happening. The board are going to want a premium on a price that is already inflated because of the speculation and I can't see Disney goi

by nikcub 10y ago

I don't see this deal happening. The board are going to want a premium on a price that is already inflated because of the speculation and I can't see Disney going to $25-30B nor Salesforce being able to construct a deal around stock Salesforce: in exchange for ~50% of market cap would be adding $2B of Twitter revenue growing at ~5% to their $6B of revenue growing at 25%+ Disney: for 16% of their market cap Twitter's revenue is half of what Disney's top-line has been growing each year - and again not much growth Can't see a case where either would unlock user or revenue growth Not sure what is next for Twitter, but it looks like another year of plodding along trying different things.

mc32 10y ago
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.
- prostoalex 10y ago
  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.
  - icelancer 10y ago
    >YHOO today is trading at $43-44 a share What % of that is their core business that MS offered to buy?
  - mc32 10y ago
    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.
  - palebluedot 10y ago
    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.
    - mtrpcic 10y ago
      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.
    - lesdeuxmagots 10y ago
      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.
      - beambot 10y ago
        Indeed, for a long-term "buy & hold" investor, the share price is much more meaningful than market cap because of the buybacks.
  - bhouston 10y ago
    Did that offer include the AliBaba stake?
- katzgrau 10y ago
  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.
  - jfoster 10y ago
    Twitter makes ~$2 billion in revenue. Their market cap and funding may not fit, but they're a pretty huge company.
    - katzgrau 10y ago
      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.
    - katzgrau 10y ago
      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.
    - Kadin 10y ago
      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.
gxs 10y ago
I don't care much about this whole ordeal but your numbers are plain wrong. FYI Twitter's revenue has basically doubled every year the last 5 years.
- dexterdog 10y ago
  And how has profit followed along?
  - gxs 10y ago
    The poster said Twitter's revenue has grown 5%. This is wrong. No matter how much you down vote me, no matter how much you want that to be right, that number is wrong. Look it up yourself.
- dexterdog 10y ago
  And how has profit followed along?
hardtke 10y ago
Twitter revenue is growing at 20% y/y as of last quarter, not 5%.
- baccheion 10y ago
  This leaves them being worth ~$10 billion (revenue * (0.1 * growth + 1)) (or ~$18 billion if the 6.4x multiple LinkedIn got is used). It'll be mighty hilarious to see potential bidders grossly overpay for a company that's already steadily slowing/declining.
  - andruby 10y ago
    How exactly is $2B * (0.1 * 5% + 1) == $10B? I genuinely want to understand your valuation formula.
    - baccheion 10y ago
      https://news.ycombinator.com/item?id=12651012 https://news.ycombinator.com/item?id=12651012 According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).
    - chucksmash 10y ago
      I don't intuitively understand where that 0.1 comes from but otherwise it looks a lot like a formula for compounded growth of 5% a year that is missing an exponential term.
- nikcub 10y ago
  Was 20% - referring to future growth, based on guidance for upcoming quarter it is ~5% This is, afterall, the problem that sparked all the acquisition talks
forrestthewoods 10y ago
I hope no one buys and Twitter collapses. I use Twitter. I enjoy Twitter. Twitter does many good things for the world. But it's terrible in a million ways. I'm not sure that it's immediate collapse wouldn't be a net benefit for society. Let Twitter die. Turn into ash. Let something new have a chance to grow and flourish.
pron 10y ago
I think Twitter is hoping for a strategic acquisition, based not on financials but on a brand and a vision. I guess this is how their board values the company. Either a buyer would be as enthusiastic about the dream as they are, or they'll realize that the dream is worth a lot less.
icantdrive55 10y ago
I don't think Disney is "going to $25-30B" either. I still think Disney is Very interested. Twitter seems like a perfect fit for Disney. I've always felt Twitter is kinda juvenile to begin with. Kids argue, flirt, praise, describe movies, books, gadgets, toys in short blurbs; usually under 140 characters. (Yes--I know they upped it) My point is Disney is all about capturing the youth market. They plan decades ahead. They want to coral the kids into their ecosystem. Twitter, if reworked, could be one of their tools? For instance, Disney is trying to capture the two-to-seven-year-pod demographic, hoping to steal viewership fron Viacom(Dora the Explorer, SpongeBob SquarePants). To do so they shuttered its 12 year old SOAPnet channel, which was devoted to Soap operas, to create the new Disney Junior Channel. The channel will feature children's programs. Supposedly only 8 percent of teen boys use Twitter. I think with the right marketing, and dumbing Twitter down further, as in of ease of use; Disney could make money with Twitter. They could market toys, movies, all their dubious products. The first time I heard the word Twitter, I cringed, and internally said I will never Tweet. I have Tweeted 4 times, but I'm not the right demographic. Kids love the word, especially little girls. That combined with Disneys aggressive marketing, and Disney could make it work. They would need to make it kid friendly though. I think they alwready have plans in the works. It's alwready the biggest gossip site, with the exception of FB, and what do little girls do well--Gossip! I don't know what they will intimately pay, but Twitter and Disney seem destined to marriage. I'm tempted to put my last five grand in Twitter stock, and crossing my fingers Disney pays through the nose.

by nikcub 10y ago

mc32 10y ago

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.

prostoalex 10y ago
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.
- icelancer 10y ago
  >YHOO today is trading at $43-44 a share What % of that is their core business that MS offered to buy?
- mc32 10y ago
  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.
- palebluedot 10y ago
  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.
  - mtrpcic 10y ago
    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.
  - lesdeuxmagots 10y ago
    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.
    - beambot 10y ago
      Indeed, for a long-term "buy & hold" investor, the share price is much more meaningful than market cap because of the buybacks.
- bhouston 10y ago
  Did that offer include the AliBaba stake?
katzgrau 10y ago
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.
- jfoster 10y ago
  Twitter makes ~$2 billion in revenue. Their market cap and funding may not fit, but they're a pretty huge company.
  - katzgrau 10y ago
    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.
  - katzgrau 10y ago
    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.
  - Kadin 10y ago
    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.

gxs 10y ago

I don't care much about this whole ordeal but your numbers are plain wrong. FYI Twitter's revenue has basically doubled every year the last 5 years.

dexterdog 10y ago
And how has profit followed along?
- gxs 10y ago
  The poster said Twitter's revenue has grown 5%. This is wrong. No matter how much you down vote me, no matter how much you want that to be right, that number is wrong. Look it up yourself.
dexterdog 10y ago
And how has profit followed along?

hardtke 10y ago

Twitter revenue is growing at 20% y/y as of last quarter, not 5%.

baccheion 10y ago
This leaves them being worth ~$10 billion (revenue * (0.1 * growth + 1)) (or ~$18 billion if the 6.4x multiple LinkedIn got is used). It'll be mighty hilarious to see potential bidders grossly overpay for a company that's already steadily slowing/declining.
- andruby 10y ago
  How exactly is $2B * (0.1 * 5% + 1) == $10B? I genuinely want to understand your valuation formula.
  - baccheion 10y ago
    https://news.ycombinator.com/item?id=12651012 https://news.ycombinator.com/item?id=12651012 According to the poster, the growth rate is 20% not 5%. Either way, to ball park acquisition price, you can divide growth rate by 10, add 1, then multiply in yearly revenue ((growth% / 10 + 1) * revenue). You can also divide growth rate by 10, double it, then multiply in yearly revenue ((growth% / 10 * 2) * revenue). Those estimates assume profit margins of 30%, so if you want to have it all be a multiple of profit, then divide the multiple by 0.3, then multiply that into yearly profit ((growth% / 10 + 1) / .3 * profit --or-- growth% / 10 * 2 / .3 * profit).
  - chucksmash 10y ago
    I don't intuitively understand where that 0.1 comes from but otherwise it looks a lot like a formula for compounded growth of 5% a year that is missing an exponential term.
nikcub 10y ago
Was 20% - referring to future growth, based on guidance for upcoming quarter it is ~5% This is, afterall, the problem that sparked all the acquisition talks

forrestthewoods 10y ago

I hope no one buys and Twitter collapses. I use Twitter. I enjoy Twitter. Twitter does many good things for the world. But it's terrible in a million ways. I'm not sure that it's immediate collapse wouldn't be a net benefit for society. Let Twitter die. Turn into ash. Let something new have a chance to grow and flourish.

pron 10y ago

I think Twitter is hoping for a strategic acquisition, based not on financials but on a brand and a vision. I guess this is how their board values the company. Either a buyer would be as enthusiastic about the dream as they are, or they'll realize that the dream is worth a lot less.

icantdrive55 10y ago

I don't think Disney is "going to $25-30B" either. I still think Disney is Very interested. Twitter seems like a perfect fit for Disney. I've always felt Twitter is kinda juvenile to begin with. Kids argue, flirt, praise, describe movies, books, gadgets, toys in short blurbs; usually under 140 characters. (Yes--I know they upped it) My point is Disney is all about capturing the youth market. They plan decades ahead. They want to coral the kids into their ecosystem. Twitter, if reworked, could be one of their tools? For instance, Disney is trying to capture the two-to-seven-year-pod demographic, hoping to steal viewership fron Viacom(Dora the Explorer, SpongeBob SquarePants). To do so they shuttered its 12 year old SOAPnet channel, which was devoted to Soap operas, to create the new Disney Junior Channel. The channel will feature children's programs. Supposedly only 8 percent of teen boys use Twitter. I think with the right marketing, and dumbing Twitter down further, as in of ease of use; Disney could make money with Twitter. They could market toys, movies, all their dubious products. The first time I heard the word Twitter, I cringed, and internally said I will never Tweet. I have Tweeted 4 times, but I'm not the right demographic. Kids love the word, especially little girls. That combined with Disneys aggressive marketing, and Disney could make it work. They would need to make it kid friendly though. I think they alwready have plans in the works. It's alwready the biggest gossip site, with the exception of FB, and what do little girls do well--Gossip! I don't know what they will intimately pay, but Twitter and Disney seem destined to marriage. I'm tempted to put my last five grand in Twitter stock, and crossing my fingers Disney pays through the nose.