Dotcom fears amid $10bn Twitter talks

Steve Dinneen
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FEARS that a second dotcom bubble is rising grew yesterday, with Google and Facebook both understood to be in talks to buy Twitter for up to $10bn (£6.23bn).

The Silicon Valley giants are in “very speculative” negotiations to take control of the hugely popular microblogging site for a valuation of between $8-10bn, according to people close to the deal.

In its recent financing round, Twitter was valued at $3.7bn, after selling $200m worth of shares. The site has 175m registered users who send 95m “tweets” of up to 140 characters every day.

The talks follow the rejection of a $6bn Google bid for online deal site Groupon in December.
LinkedIn, the professional networking site, is expected to reach a valuation of around $2bn after filing plans for an IPO. And Facebook has been valued at a staggering $50bn after Goldman placed a number of its privately held shares. Facebook brought in revenues of around $2bn last year.

Ian Maude of Enders Analysis told City A.M.: “It looks like March madness has come early. There have been a number of pretty crazy valuations recently but this one wins the prize.

“Facebook has a high valuation but it has a much deeper relationship with its customers than Twitter does. There may be ways to better monetise the service but $10bn is astronomical.”

But Nic Brisbourne, an investment manager for DFJ Esprit, said: “It’s a big multiple, but they are clearly not looking at Twitter on a multiple basis.

“Google bought YouTube for $1.65bn on revenues of virtually zero.

“It looked at the market and decided that was an important sector to control. It could apply the same logic to Twitter. It is a fantastic service – any valuation is going to be based on where the market is at and the market is very frothy right now.”