Facebook Made a Play for Twitter

With a slight pause in Austin tech news during this short holiday week, we’re taking a look at what’s going on nationally to find something interesting to write about. Namely, the revelation that Facebook and Twitter have been in talks since mid-October about Facebook acquiring Twitter for a reported $500M (in Facebook stock, of course). According to the New York Times, Facebook walked away because the pricetag was too high. Writer Saul Hansell called the company potentially important, even though it has no revenue (very similar to Facebook itself in it’s early years). CNET is reporting that Twitter is the one that nixed the deal. All of these reports point to Kara Swisher’s blog post from yesterday where she broke this story. She suggests that talks merely broke down, but it was definitely over the valuation of the deal.

Saving face, the folks are Twitter are saying it’s really to early to look at a deal yet, and things will change when they announce their revenue model in the first half of next year. Either way, with these details becoming public it’s a brilliant strategic move by Twitter because now anyone else who approaches them knows what the price range of a deal looks like. Or is it a strategic blunder? Any deal less than $500M in the future will be deemed inferior (discounts for the non-liquid nature of Facebook stock notwithstanding).

Pre Thanksgiving food for discussion, and don’t forget to checkout your favorite Facebook apps here.

About Bryan Menell

Bryan is the Managing Editor for AustinStartup and the CEO of Mahana. He is a co-founder of Capital Factory, an investor and advisor, and runs the popular Austin Tech Happy Hour with his wife.

Comments

  1. I expand on this post with the idea that the clock is ticking for any of these deals, and in the current economic situation valuations are decreasing by the second. http://blog.cosential.com/?p=148

  2. I have to be honest, I don’t understand why Facebook particularly needs Twitter. Whenever I have to explain Twitter to people who don’t use it, I say that it’s just like Facebook status updates.

    Because, well, it is.