THERE are lots of employees who believe their company is run by a comedian. In Twitter’s case, it is literally so.
Dick Costolo is a former stand-up who rejected job offers from technology companies to work in improvisational comedy. But his latest pronouncement is no joke.
The $10-$15 billion (£6.5-£9.5bn) planned flotation of the company he runs was confirmed last week – appropriately in a tweet – and has set the ball rolling on one of the most intriguing listings in years.
Potential investors are asking if the timing is right while users are concerned at the prospect of any “commercial creep” that might undermine its simple operating model.
It is more narrowly focused than Facebook, operating as both a social networking site and a newswire feed, but its growth is unquestioned. Twitter has not been slow to put its pre-flotation business model on a stronger commercial and technical footing. In just seven years revenues are expected to hit $600 million, double last year’s income, and, crucially, it is making strategic investments, such as the $350m acquisition last week of the mobile advertising technology business MoPub.
The two-year-old MoPub allows mobile applications to manage advertising so that users see those ads most attractive and relevant to them. This should increase the number of click-throughs. Of Twitter’s $288m revenue for 2012, $138m came from mobile ad sales and MoPub is pulling in an annualised $100m.
Aside from MoPub, Twitter has acquired social media data firm Trendrr and the technology training company Marakana. Other recent buys are the music-search platform We Are Hunted and television social analytics company Bluefin Labs.
Wall Street is said to have a huge appetite for technology stocks and has just coughed up another $1.2bn for LinkedIn, the networking site. Any concerns about another dotcom bubble are not evident and, in any case, those firms getting support are creating revenue streams that the dotcom casualties so blatantly did not.
The biggest question of all, however, is how much profit, if any, Twitter is making. As the company releases little information it is hard to know, though it is said to be close to break-even. If investors feel profits will emulate the fast revenue growth, then a successful flotation is assured.
But Twitter needs to provide a lot more than last week’s statement of intent that even fell short of its own 140-character limit.
Healthy banks may be targeted
THE TSB was relaunched last week, backed by a marketing campaign promoting it as local banking. Not all decision-making will be delegated from HQ to every high street in the country. However, its commitment to being local does come with a promise to retain customers’ deposits to fund local communities.
Aside from that, TSB remains part of Lloyds Banking Group for a year or so until it is ready to fly the nest in a flotation, or a buyer waves a fat cheque under the nose of boss Antonio Horta-Osorio.
The emergence of a broader banking sector is in accordance with the coalition’s desire for broader competition. But the banks’ return to health may also make them targets for buyers poised with pots of cash to snap up Western assets. The legacy of the banking crash may be that ownership moves to such locations as Abu Dhabi, Beijing or Singapore.