Is Twitter's best path to find a new owner? Probably. Will Twitter get sold? Maybe. Is it sensible for any company to buy Twitter for $15 billion or much more? Nope.
CNBC's David Faber reported Friday that Twitter is moving closer to a sale and may have a formal takeover offer soon. A sale isn't imminent, CNBC said, but this is perhaps the most credible reporting to date that Twitter's directors may be willing to close the curtain on the company's troubled run on the public markets.
In the absence of a clear business strategy, the only thing that drives up Twitter's stock price these days is hopes the company might be acquired. And predictably, Twitter's stock soared about 22 percent in early trading Friday, giving the company a market value of more than $16 billion. Before Friday, Twitter was trading at a relatively modest four times its expected revenue for the coming year, but those numbers are not reliable given the company's track record of missing its own forecasts.
The constant rumors about Twitter getting sold drive up the share price and make an acquisition potentially even more expensive. Given Twitter's struggles to add users, its deteriorating finances and advertisers' growing disenchantment with the company as a way to market to consumers, a sale of Twitter at current prices is imminently irrational.
Of course when it comes to acquisitions, rich companies do unpredictable things. Sometimes that works out for the best -- Facebook buying WhatsApp, for example -- and sometimes it doesn't -- such as Microsoft buying ... anything.
CNBC said Google and Salesforce.com are engaged in conversations about a deal for Twitter. Google is a natural owner for Twitter and has been a rumored buyer for years. Google or Facebook -- relatively immune from caring about what their shareholders think -- could easily absorb Twitter, hide the company's financial results and tack it onto their existing advertising sales machines. Still, it's not clear why even Google would be willing to buy Twitter now, rather than wait for it to get cheaper.
Salesforce, on the other hand, is a bit of a head-scratcher as a potential Twitter buyer. It is true that one of Salesforce's biggest lines of business is selling software used by customer-service departments to handle complaints and feedback. Twitter is likewise avidly used by customer-service teams -- as you may have noticed if you ever tweeted gripes about your cable company and got a response from them on Twitter.
But it's not clear why Salesforce would spend roughly 30 percent of its market cap to ensure Twitter and Salesforce customer-service features are used in tandem; the same benefits can be achieved with smart software collaboration.
It's also possible that Salesforce CEO Marc Benioff -- who tried really, really, really hard to buy LinkedIn -- simply wants the attention that comes from making a play for a high-profile target like Twitter. Salesforce shareholders don't look happy about such a vanity deal. The company's stock price was down about 4 percent in early trading Friday.
Once again we're in the same place with Twitter we've been for years: An acquisition makes little sense at Twitter's current prices, especially as shares go up on every takeover rumor. But just because it doesn't make sense doesn't mean it won't happen.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
A Salesforce executive seemed to confirm the company's interest in Twitter with (appropriately enough) a tweet explaining the rationale of a combination.
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Shira Ovide in New York at firstname.lastname@example.org
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