Big Two eye $10bn glitter of Twitter

Less than five years after Twitter's founders dared to believe that there was nothing important that couldn't be said with 140 characters or less, it is attracting takeover interest from the biggest companies on the internet, and the price being put on it is a thumping $10bn.

Nobody doubts that Twitter, on which its 200 million users share pithy distillations of their thoughts or links to their favourite web pages, has revolutionised communication on the internet, but the potential takeover price was raising eyebrows yesterday because not only is the company yet to turn a profit, it has not yet worked out a plan for doing so.

Reports in the financial press in the US claimed that Facebook and Google have held "low-level talks" about acquiring Twitter at a valuation of between $8bn and $10bn. For now, the company's bosses are intent on building Twitter into an independent giant, rather than selling out, so the talks have stalled, but other, unnamed suitors are also said to have started sniffing around.

Some of the savviest investors in Silicon Valley believe that Twitter's valuation is only going higher, and have been scrabbling to get their hands on shares, which are traded only on hard-to-access private markets. Two months ago, the company raised $200m to fund its development, in a fundraising round that valued it at $3.7bn.

And this week, the California venture capital firm Andreessen Horowitz, led by Netscape founder Marc Andreessen, who is on Facebook's board of directors, spent $80m buying Twitter shares at a valuation that observers said is sure to be considerably higher. The $8bn to $10bn valuation bandied about by potential acquirers suggests all these new investors are already sitting on big profits, at least on paper.

Facebook, the online network used by more than half a billion people around the world, and Google, the start-point for most people searching the internet, would be keen to wrap Twitter into their own companies, not least to stop the other from acquiring it. What Facebook, Google and Twitter have in common is that they offer ways for people to share and discover content on the Internet, and in a fast-evolving environment, no one can be sure what the future holds for any of them.

Twitter continues to soar in popularity. It has more than 200 million registered users, including one in eight people on the internet in the US, generating more than 70 million tweets a day. It has tripled the number of employees working on the business in the past year and now has some 350.

But it has only just begun to explore ways to make money. Advertisers can pay to have their 140-character tweets lifted to prominence, or to put their names on a list of popular topics, but the options are being kept deliberately limited by Twitter as the company gauges users' reaction to the intrusions. Twitter brought in $45m in revenue last year, and is expected to do a little more than double that in 2011.

Investors bought into Facebook last month, when it raised $1bn in a deal that valued it at $50bn. For many, the soaring value of these companies proves only one thing: Silicon Valley is in the grip of another bubble.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate