The big question that should always lurk in people's minds when considering a stock transaction: if they're saying that this stock is worth $500M and I don't want it in stock, why can't they sell it to someone else and give me the cash from that sale?
If it is worth $500M, they can sell that stock to a VC or other investor for that price. It probably isn't worth that much which explains why FB didn't want to go that route.
EDIT: note, this isn't meant as being harsh on stock transactions. Often times, you want to offer stock so that the people gaining the stock stay with you and have an investment in the acquiring company doing well with what they've bought. In publicly traded companies, you wouldn't want to flood the market with a huge number of common shares since that would depress the price. However, in this case, that doesn't seem to apply.
We'll find out later if they were wise. If it can't be monetized they will get $0. That could very well be the same for Facebook though, it will be interesting to see how it works out.
Twitter has plenty of room to continue growing, this is only the first of many offers they'll receive.
Honestly, that deal is almost as bad as me starting some BS company, getting it valued at several billion by a few generous accountants, and then trying to "buy" a few companies with my inflated value.
Basically there's really nothing of solid value in Facebook right now (especially given this economic situation), other than their hard assets in servers.
Until Zuckerberg comes up with a business plan and turns a profit, I'm sticking to Facebook existing as just another social networking bubble.
I agree, but there's also nothing of solid value for Twitter. They don't even have the servers. It's two absurd unproven valuations talking to each other. Comedy gold!
Not if you do your own discounting (like they did in the article - valuing the deal at $150 million). The complete lack of cash was probably a bigger stumbling block.
Facebook is a social applications host, Google is a webservices suite, Microsoft makes OS and software... Twitter is a great service because it's independent. It's a community that loves the only service provided : it's Facebook's "is" and nothing more.
This status can be updated with anything, broadcasted on everything, read by everything... It's a service that doesn't need a ton of other services to work. Without last saturday night pictures, without suggested friends, without planned events, Twitter is still Twitter, while Facebook's "is" would be just Twitter. Buying Twitter, Facebook would create a conflict between the two status services and would merge them, Twitter's "@" messages would disappear...
For a independent Twitter, put your hand up in the air o/
Google has the know how (XMPP), the significant user base (every Gmail user), and the relationship (who talks to who) information to do this themselves. Heck, they just need to start logging GTalk status messages.
You wouldn't need to refresh many times a day if twitter was able to scale enough to send updates via XMPP (like friendfeed does, natch). Rather than a different tab, it should be interested with gtalk/chatting in the gmail interface.
If it is worth $500M, they can sell that stock to a VC or other investor for that price. It probably isn't worth that much which explains why FB didn't want to go that route.
EDIT: note, this isn't meant as being harsh on stock transactions. Often times, you want to offer stock so that the people gaining the stock stay with you and have an investment in the acquiring company doing well with what they've bought. In publicly traded companies, you wouldn't want to flood the market with a huge number of common shares since that would depress the price. However, in this case, that doesn't seem to apply.