Software maker considers a takeover of social media firm as
growth efforts sputter
By Dana Mattioli and Yoree Koh
Twitter Inc. may be contemplating a future in the hands of an
acquirer after a yearslong effort to sharpen its focus and ignite
user growth has fallen short.
Salesforce.com Inc. is considering a takeover of the social
media company, according to people familiar with the matter. The
exploration is in early stages, one of the people said, and might
not lead to a deal.
Shares of Twitter rose 21% to $22.62 on Friday after CNBC
reported talks of a possible sale. Before Friday, the stock had
fallen 30% over the past year and its market value was about $13
billion. Its all-time high of $40.7 billion came in December
2013.
Salesforce Chief Executive Marc Benioff has been a voracious
acquirer, and the company has indicated an interest in challenging
its business-software competitors by devouring startups in such
areas as e-commerce and artificial intelligence.
The sales talks shift the conversation around Twitter from
constant business turmoil to the strategic and financial value it
could bring to any number of Silicon Valley giants.
Twitter is approaching the three-year anniversary of its flashy
IPO, when its stock shot up 73% as investors crowned the company a
social media star rivaling Alphabet Inc.'s Google and Facebook Inc.
for advertising dollars. Twitter had become a household name,
building a powerful communication tool that gives voice to ordinary
citizens and celebrities alike.
Since that debut, a series of management upheavals, product
delays and muddled business strategies have complicated Twitter's
effort to capture the world's mobile users and wring revenue out of
them.
Last year, Twitter brought back Jack Dorsey as its chief
executive after some investors lost confidence in former CEO Dick
Costolo's ability to spark growth in the business. Mr. Dorsey's
return was hailed by some employees and investors who believed
Twitter needed its founding architect to right the company.
But even the self-assured Mr. Dorsey, who splits his time as CEO
of payments company Square Inc., has in recent months grown
increasingly stressed about the difficulty of fixing Twitter amid a
march of negative press reports, according to people close to
him.
Mr. Dorsey has sought to reinvigorate Twitter's ad business
around video and revive user growth by making the short-messaging
service he invented easier to use and by getting rid of rules that
some find confusing.
Those efforts haven't translated into meaningful user or revenue
growth. Twitter's second-quarter revenue rose 20% to $602 million,
its smallest gain and eighth-straight period of declining growth.
Total monthly users grew just 1% to 313 million.
Meanwhile, other social and messaging apps such as Facebook,
Instagram and Snapchat Inc. have gained favor with advertisers and
wooed smartphone users at a faster clip. Twitter's share of global
digital-ad spending stands at just 1.2%, according to
eMarketer.
Twitter's struggles, alongside a deal-friendly climate in
Silicon Valley, have raised questions around the firm's future as
an independent public company.
Twitter's audience is still sizable for most companies
interested in expanding their social media offerings, especially as
people spend more of their time on smartphones.
Public figures, from Kim Kardashian to Pope Francis, have ardent
followings in the millions and outsize cultural influence on
Twitter, as seen during the presidential election season each time
Donald Trump sends a tweet.
Twitter also has a small but promising data-licensing business
that lets companies mine the billions of tweets flowing through the
service each day for information. That group's revenue totaled $67
million in the second quarter, up 35% from a year ago.
Many big brands like Anheuser-Busch InBev NV ADR and Ford Motor
Co. are still eager to advertise on Twitter, especially now that
the company is creating ways for people to watch live events free.
Last week, Twitter introduced its first live stream of a National
Football League game, and on Monday it plans to broadcast Bloomberg
TV's feed of the presidential debate. Executives hope the push into
live-streaming will attract the more premium ad dollars that come
with video ads.
"I think [a Twitter acquisition] would be a way for a media or
technology company to have immediate access to a sizable platform,"
said Nomura analyst Anthony diClemente. "That's a big means of
distribution of media and social content and in some ways the
strategic value of Twitter is in the eyes of the beholder."
Twitter would in some ways be an odd fit for Salesforce, which
is focused on providing software services to businesses.
Mr. Benioff has signaled more big deals are coming and expressed
his frustration after losing out to Microsoft Corp. in the
acquisition of LinkedIn Corp. On Friday, Salesforce shares fell
5.6% to $70.39.
Like LinkedIn, Twitter could bring Salesforce reams of data to
create recommendations and insights for its corporate customers.
Salesforce already has a partnership with Twitter to feed social
media data into Salesforce's analytics systems to give its
customers insights on things like how their customers are talking
about their products and brands.
That alliance, started in 2012, provides Salesforce access to
the full fire hose of public tweets on Twitter, giving Salesforce
insight into the value of that information for its products.
--Rachael King contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com and Yoree Koh at
yoree.koh@wsj.com
(END) Dow Jones Newswires
September 24, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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