Twitter chief quiet on being a 'takeover target'
Tuesday 15 February 2011
The chief executive of the fast-growing social networking site Twitter yesterday batted away questions over whether the company was a takeover target and failed to outline how it could make enough money to justify its rumoured $10bn (£6bn) valuation.
Dick Costolo took the stage at Barcelona's Mobile World Congress to present a state of the nation for the social networking site and its potential opportunities on mobile phones.
The service is growing "at a ridiculous rate" and the company is "already making money", he said. But he failed to provide any concrete revenue projections or growth targets to the delegates. The company recorded a loss on $45m in revenues last year.
Eden Zoller, the principal analyst at Ovum, said: "Twitter quoted figures on healthy growth and use, which is good but not surprising. What it didn't provide was concrete details on how effective its nascent businesses are proving to be in driving revenues – lots of case studies of cool brands using Twitter but no hard line on the margins this brings to Twitter."
Reports emerged last week that the company had held preliminary talks with Google and Facebook over a potential deal, and the two companies had valued Twitter at between $8bn and $10bn. "I don't know where these things come from," Mr Costolo said yesterday when asked about the accuracy of the figures, adding: "It is just a number."
He clapped as another questioner asked if he was interested in selling or would "continue to tweet alone" but refused to be drawn, saying only: "I refer you to my previous answer."
Twitter currently has three sources of revenue. Promoted trends allow a company to pay to advertise in the list of top trends. It also offers promoted tweets and sponsored accounts.
Mr Costolo said there would be other models introduced later this year, but again failed to elaborate. His vision for the company he took over in October was about making it increasingly "simple". Internet companies are increasingly interested in presenting to the mobile community after the rise of smartphones. Mr Costolo said 40 per cent of tweets were now from mobiles.
The company had made mistakes in its early days, Mr Costolo said because founders Jack Dorsey, Biz Stone, and Evan Williams "shot themselves in the foot, the head and everything else". He added: "We're out of the woods on that now."
The company now has 350 employees. To highlight the growth in traffic, Mr Costolo pointed to the American football Superbowl in 2008, which saw an average of 27 tweets a second during the game. In last week's Superbowl, there were 4,000 tweets per second by the end.
He added that television companies were benefiting as more people were eschewing personal video recorders to watch shows live so they can comment on Twitter with their friends while watching. He said that Twitter had become "the second screen".
The speech came shortly after Steve Ballmer, the chief executive of Microsoft, gave the keynote speech, in which he said Windows smartphones would break the hold exerted on the industry by Apple and Android. Microsoft linked up with Nokia last week. Mr Ballmer said: "There's a sense of tremendous opportunity. It should be a great year for our company, the industry and consumers."
* Apple is expected to release a new iPhone Nano which would be half the size of the current models and a cheaper competitor to Google Android, according to reports in New York.
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