Blog – October 2016

The seemingly all pervasive Twitter is not enjoying such a great time just now. A shareholder lawsuit has just been filed against CEO Jack Dorsey and other officers accusing them of concealing information as they sold chunks of their shares in 2015 – for an aggregate of $291m.

This news comes in a week when Salesforce.com, possibly the last in a line of credible prospective suiters, has declared themselves out as an acquirer. Others in that line-up have apparently included 20th Century Fox, Verizon, Google, Walt Disney and Facebook.

The problems are several for Twitter, not least slowing user growth and declining advertising revenues. The trouble is it has not become the billion-user site that its cost base might justify. It now has 313m monthly active users – a lot, yes, but consider that Facebook has 1.7bn. And all this is reflected in the fact that Twitter has never made a profit. It lost $107m in its last quarter and $521m last financial year.

So how long can they hang on without a buyer? One might be mindful of what happened to Yahoo – it sold this year to Verizon for around 1/10th of that offered by Microsoft back in 2008! The lesson here: if the plan isn’t working and your growth targets are clearly not going to be hit, best to consider alternatives sooner rather than later.

Postscript: whilst I have nothing against the concept of Twitter or its potential utility for good, I am increasingly tired of so much journalism (across all media) descending into a ‘Twitter scrape’. The torrent of fatuous opinions thereby emanating always makes me think of this wonderful Mitchell & Webb sketch (just substitute ‘tweet’ for ‘email’ and you’ll get my drift). What do you reckon?