Twitter on the Block? CEO’s Departure Spurs Speculation

(Los Angeles Times/TNS) -

Will Google buy Twitter?

Following news that embattled Twitter CEO Dick Costolo is stepping down, some analysts are speculating that Twitter could be an acquisition target.

Years ago, Twitter turned down offers from Google and Facebook, choosing instead to compete with them for ad dollars and users. But advertising never became as lucrative as investors wanted and user growth has stagnated for the microblogging service.

Now, the company is in a state of flux as its chief executive of five years is scheduled to step down July 1, a situation that Jefferies analysts say could make conditions ripe for an acquisition.

“Prospective buyers have been interested in purchasing Twitter in the past,” analysts Brian Pitz and Brian Fitzgerald wrote in a note to clients. “And the lack of a CEO successor signals to us the potential for acquisition.”

Pitz and Fitzgerald didn’t name any potential suitors, but said the likelihood of a deal is “heightened” as Twitter scours internally and externally for a new CEO. Come July 1, co-founder Jack Dorsey will take the helm on an interim basis.

Twitter has long been the subject of acquisition rumors, none of which has come to pass. But that hasn’t stopped the chatter.

Major Twitter investor Chris Sacca recently posted a nearly 8,500-word essay lamenting all the missed opportunities to boost advertising at Twitter. He then took to CNBC to proclaim that Google and Twitter would be an “instant fit.”

But some observers cast doubt on a potential sale.

“I’d be surprised to see Twitter get acquired by another company,” said Betsy Sigman, professor of social media and information systems at Georgetown University.

According to Sigman, recent changes introduced to Twitter, such as the removal of a character limit in direct messages and the launch of the Periscope mobile app, could help the company.

Removing some of the limitations in Twitter’s direct messaging feature could encourage direct message advertising, which could boost the company’s bottom line. And with Periscope, the company is tapping into the growing live video streaming market, which “could catch on” and increase engagement.

That said, if Twitter were to be acquired, Sigman said Google would be an obvious candidate because it lacks its own robust social network. “They’ve never done as well as Facebook with Google Plus.”

A Google spokesperson did not immediately comment.

In a conference call Thursday regarding his departure, Costolo said Twitter’s board would “carefully evaluate” any offer and that it’s committed to maximizing value for shareholders.

But, he said, the focus is to do so as an independent company.

On Friday, Twitter shares rose 6 cents, or 0.2 percent, to $35.90.