Apple is reportedly considering an investment in Twitter in the “hundreds of millions” range, according to insiders who spoke with the New York Times Friday night. The amount would supposedly value Twitter at $10 billion, up from the $8.5 billion it was valued at last year.
Such an investment would give Apple a powerful new foothold in the social realm, where it has faltered in recent years. Remember Ping? It wasn’t that long ago that Ping was going to unite iTunes users around their music preferences, but last May, Tim Cook admitted that Ping wasn’t working out.
“We tried Ping and I think the customer voted and said ‘This isn’t something I want to put a lot of energy into,’” said Cook in an interview at the AllThingsD conference.
Apple has already shown its fondness for Twitter by weaving it into OS X and iOS. But owning a stake in Twitter could give Apple some much needed social leverage against its rival Google, which dominates the smartphone OS market and has been seeing some sharp growth in Google Plus users. Unique visits to Google Plus picked up 66% between November 2011 and June 2012 with 110.7 million global users in June, compared to 66.7 million users in November.
Such a deal could also give Apple some fuel for the fight against Facebook, which has long been rumored to be developing a phone. The Los Angeles Times reported on Thursday that Facebook will be unveiling its very first handset some time next year (if that’s not vague enough for you, Facebook is also reportedly planning to release a new iPhone app…in the coming months).
But does Twitter need the money? Of course not. Earlier this year, CEO Dick Costolo said that Twitter has “truckloads of money in the bank.” But Twitter has also been criticized for having a sky-high valuation that doesn’t match up with its revenue and income generation. With 140 million users, Twitter generated $139.5 million in ad sales last year. A valuation of $10 billion is more than 70x the company’s actual revenue. By comparison, Facebook's market cap is $50.68 billion--13x its 2011 full-year revenue of $3.71 billion. LinkedIn's market cap of $10.68 billion is roughly 19x its 2011 revenue of $522.2 million.
But nothing is set in stone yet, so we’ll just have to wait and see on this one.
Apple and Twitter were not immediately available to comment.
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