Apple in talks with Twitter about investing hundreds of millions of dollars
It is being reported that Apple has held serious talks with Twitter in recent months about making a sizable investment in the social networking firm. Such a deal would help the iPhone maker bridge the gap in its own lack of social media presence.
The investment is said by the New York Times to be valued in the region of hundreds of millions of dollars.
This would add more than $1.6bn to Twitter’s valuation catapulting it to $10bn. It was last valued at $8.4bn last year.
The report said that the talks are not on going, and might not in the end lead to Apple taking a take, but it does strongly suggests that the two are preparing to work more closely together.
Both firms would gain something important from developing a closer working relationship. Apple would be able to work with Twitter on social development, strengthening integration with its mobile and tablet devices, while the microblogging firm would see benefits in mobile. That could mean better integration with Apple products and other benefits on the mobile front, which is seen as crucial to making Twitter profitable.
The relationship would also help both in the market against rivals Google, Facebook and Microsoft. The latter two are already aligned with Microsoft owning a small stake in Facebook.
Looking at the market there are few social networks of note that Apple could do a deal with or acquire. Apple CEO Tim Cook recently seemed to rule out the idea that it had to buy a social media firm when he said: “Apple doesn’t have to own a social network”.
It’s a fair point. Apple doesn’t see social as its core business, but rather technology. Although Cook agreed that Apple does need to be social and a deal with Twitter could certainly achieve that.
An Apple investment would give it [Twitter] the glow of a close relationship with a technology icon, and would instantly bolster its valuation, which, like that of other start-ups, has languished in the wake of Facebook’s lacklustre market debut. In fact, word of the talks comes at a time when some are asking whether expectations for the potential of social media companies have gotten out of hand, and shares of Facebook, Zynga and other companies have wilted.
But Twitter does not need Apple’s cash. Earlier this year, Dick Costolo, Twitter’s chief executive, said the company had “truckloads of money in the bank.”
The truckloads, according to people familiar with the matter, add up to more than $600 million in cash on hand. This comes from the $1 billion in financing it has raised over the years and, more recently, from a healthy flow of advertising revenue.
Regardless, Twitter is widely expected to pursue a public offering within the next couple of years, whether or not it agrees to deals with investors like Apple, the New York Times reports.