Facebook, Google eye Twitter

As Internet valuations climb and
bankers and would-be buyers circle Silicon Valley in an increasingly frothy
tech market, many eyes are on one particularly desirable, if still enigmatic,
target: Twitter.

Discussions with at least some
potential suitors have produced an estimated valuation of $8 billion to $10
billion.

Executives at both Facebook Inc.
and Google
Inc., among other companies, have held low-level talks with those at Twitter
Inc. in recent months to explore the prospect of an acquisition of the messaging
service, according to people familiar with the matter.

The talks have so far
gone nowhere, these people say.

But what’s remarkable is the money
that people familiar with the matter say frames the discussions with at least
some potential suitors: an estimated valuation in the neighbourhood of $8
billion to $10 billion.

This for a company that, people
familiar with the matter said, had 2010 revenue of $45 million—but lost money
as it spent on hiring and data centres—and estimates its revenue this year at between
$100 million and $110 million.

“Are these prices justifiable
based on financial multiples? No,” said Ethan Kurzweil of venture capital
firm Bessemer Venture Partners.

But these start-ups are building social services
and have lots of data about their users and “the market is valuing that
mightily right now.”

A Twitter spokesman declined to
comment on its finances, valuations and interest by other companies.

Google and
Facebook also declined to comment.

Both Google and Facebook have
discussed buying Twitter in the past and have kept their lines of communication
open, people familiar with the matter said.

One of these people said companies
including Facebook and Google have expressed “latent interest” in an
acquisition.

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