Twitter has a ridiculous valuation right now without really having the revenue to show for it. In order to purchase Twitter, Google would probably need to write a check for $5 Billion at the minimum. If you think about the idea of the purchase price being 10X revenue, that you mean that Twitter would need $500 Million in revenue. I don’t think anyone has heard of any revenue estimates for 2010 anywhere near that number.
Twitter has not proven to be stable
Twitter continues to be unstable over the long term. Does Google really want to deal with those problems? If Twitter could be more reliable over the long term, they would not need Google’s help. So stability is more of a catch-22.
Twitter’s revenue plans are not in line with Google’s
Twitter revenue has been in promoted trends and promoted tweets so far. This is basically just fancy advertising so it would seem to be in the same arena as Google’s revenue. However, Google’s properties make a point of the advertising not being in the content.
Twitter’s infrastructure is nothing like Google’s
Supposedly, Google likes their acquisitions to port their code to the Google infrastructure. I am not sure how much of this is true, but Twitter has been known to use Java, Ruby, Scala, and almost anything else that will work at the time.
Just because they have the cash
I have seen the reason that Google should buy Twitter because Google has enough cash to do it. That is like saying I should buy a new car because I have the cash to do it. Do I need the car? Why would I buy something, just because I have the money to do it.
Just to compete with Facebook
The other reason that seems to be popular is that Google needs to compete with Facebook somehow, so buying Twitter is the best option. How does Twitter help you fight Facebook? Twitter does not know how to fight Facebook, and even tries to avoid comparisons to Facebook.
Buying Facebook is a better idea
If you are really looking to make a big purchase, why not buy what really makes sense. Buy Facebook for $30 billion. You really do not want to compete with Facebook, but their revenue, estimated to be over $1 Billion in 2010, would be a great addition. You can leave Facebook completely alone to run their business, and just reap the long term benefits.
Author: Louis Gray
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