Salesforce Reportedly Considering Acquiring Twitter
Industry watchers want to know: How could a news-messaging cloud service augment the Salesforce core business of customer-relationship management?Salesforce.com and Twitter—two companies that have banked hundreds of millions of dollars in venture capital over the years but have yet to show any substantial profit—are "exploring" a multibillion-dollar merger in which Salesforce will become Twitter's new owner, The Wall Street Journal reported Sept. 23. Neither company commented officially on the story. Later in the day Sept. 23, reports surfaced that the Disney Company and Google were also interested in talking to Twitter, but nothing substantive came of them. Twitter famously has been losing tens of millions of dollars per year for nearly the past decade. Salesforce also has lost millions, but since both internet companies are considered in "growth mode," that's what investors want to see to maintain a continued supply of capital to both of them.
For the record, Salesforce, has been profitable on occasion, but just barely. For example, in the quarter ending April 30, 2015, posted net income of just over $4 million or $0.01 per share. There have been a few other similar quarterly performances. Naturally, it does have a large cushion of operating income and cash reserves. Neither company is in danger of folding anytime soon.
Deal in Early Stages of Exploration
"If you think about it, Salesforce is all about making sales people more effective," Enderle told eWEEK. "Traditional sales training teaches that the more you know about your customer, the better you are able to engage with them. While Twitter sucks as an advertising platform, it is one of the best tools to find out what people are interested in.
"This could give a sales person or marketer far deeper information about their target audience and give Salesforce a massive advantage in this space as a result. It likely would be far higher quality than you'd get out of Facebook or Google simply because it would be far more timely and tied to an AI engine. Salesforce could recommend real-time campaigns or prep sales people uniquely for their engagements based on advice from the AI." Any New Owner Would Have to Handle Twitter Carefully What would make this acquisition difficult is not screwing up Twitter post-acquisition, Enderle said. "Twitter's most important customers are likely reporters who take the tweets and use them to find stories, giving people who are active on the service the sense that they better informed and more deeply engaged with events," Enderle said. "It would be incredibly easy to break this; in fact, some of the handling of trolls and bullying has been pretty poor to date weakening the service substantially. "If you overlay Salesforce corporate policy, this damage could dramatically increase and potentially destroy the service. Keeping this at arm's length and properly staffed will likely be critical to the success of this offering, and given how different it is than Salesforce, possibly a bridge too far for the firm." Silicon Valley in general is a well-connected community, and Twitter and Salesforce already have some inside connections. For example, Salesforce recently acquired productivity-software maker Quip for $582 million. Quip was co-founded by Bret Taylor, a former Facebook executive and Twitter's newest board member. Taylor will report directly to Benioff in his new role at Facebook. Salesforce also runs a partnership with Twitter to feed social-media data into Salesforce's analytics systems to give its customers insights on things such as how their customers are talking about their products and brands. That 4-year-old deal provides Salesforce access to the full number of public tweets on Twitter, giving Salesforce insight into the value of that information for its products. Editor's note: This story has been updated to clarify the financial performance of Salesforce.com.