No Tweets From Twitter About Acquisition Rumour

Google, Facebook and others continue to be interested in buying Twitter, the microblog service whose value has increased with the 2010 introduction of ads linked to the short messages.

Google and Facebook, whose rivalry has grown more intense as the social network has lured eyeballs from the search giant, have reportedly broached the notion of acquiring Twitter for $8 billion to $10 billion (£5 billion to  £6.2 billion), according to The Wall Street Journal.

Fledgling Ads Service Has Upped The Price

Twitter declined to comment on what it called “rumours”. Still, those are lofty valuations for a company that earned $45 million (£28 million) in 2010, mostly from its fledgling ad business.

It is also more than double the company’s estimated worth as of December, when it banked $200 million (£125 million) in venture capital funding, valuing the company at $3.7 billion (£2.3 billion). Andreessen Horowitz also reportedly just pumped $80 million (£50 million) into the company.

The pricey offers are predicated on potential upside, not unlike that of local deals Website Groupon, which spurned a $6 billion buy-out offer from Google to take $950 million (£592 million) in funding to grow.

Twitter has 200 million users and, according to eMarketer, is on course to make $150 million in advertising, or triple its 2010 earnings, in 2011.

The ad revenue could be greater if Twitter continues to successfully drive its Promoted products suite and launches its self-serve platform en masse this year.

Launched last April under the aegis of Twitter CEO Dick Costolo, Promoted Tweets allows companies to pay for tweets hawking their products on a CPM (cost per mille) basis, or per thousand people who see their tweets.

Promoted Trends features a company or product name in the trending topics on Twitter. The newest ad offering is Promoted Accounts, which are suggested based on a user’s public list of whom they follow. All these products have proven their worth.

One would be tempted to take the acquisition talks lightly, given Twitter’s management – including co-founders Evan Williams and Biz Stone, as well as Costolo – has pledged to build an independent business, perhaps becoming a $100 billion public company, according to the Journal.

As for the suitors, one could easily argue Google is in much greater need of a social-communications tool than Facebook. Google’s +1 social-layer service is allegedly months away from emerging, and Facebook continues to build user engagement, beating out Google, Yahoo and Microsoft in time spent online in 2010.

Facebook is not in dire need of generating traffic or a social-communications tool, so the smart guess is Facebook is talking just to up any prospective bid from Google or anyone else.