Sun, Jul 29, 2012 - Page 13 News List

Apple in Twitter ‘talks’: sources

CORE BUSINESS RETHINK:The smartphone and tablet manufacturer is said to be in talks with the microblogging firm, having struggled to break into the social media sector

NY Times News Service

Apple, which has stumbled in its efforts to get into social media, has talked with Twitter in recent months about making a strategic investment in the microblogging site, according to people briefed on the matter.

While Apple has been hugely successful in selling smartphones and tablets, it has little traction in social networking, which has become a major engine of activity on the Web and on mobile devices. Social media is increasingly influencing how people spend their time and money — an important consideration for Apple, which also sells applications, games, music and movies.

Apple has considered an investment in the hundreds of millions of dollars, one that could value Twitter at more than US$10 billion, up from an US$8.4 billion valuation last year, these people said. They declined to be named because the discussions were private.

There is no guarantee that the two companies, which are not in negotiations at the moment, will come to an agreement, but the earlier talks are a sign that they may form a stronger partnership amid intensifying competition from the likes of Google and Facebook.

“Apple doesn’t have to own a social network,” Timothy Cook, Apple’s chief executive, said at a recent technology conference, “but does Apple need to be social? Yes.”

Twitter and Apple have already been working together. Recently, Apple has tightly sewn Twitter features into its software for phones, tablets and computers, while, behind the scenes, Twitter has put more resources into managing its relationship with Apple.

Though an investment in Twitter would not be a big financial move for Apple by any stretch — it has US$117 billion in liquid investments and it quietly agreed to buy a mobile security company for US$356 million on Friday — it would be one of Cook’s most important strategic decisions as chief executive and it would be an uncommon arrangement for Apple, which tends to buy small startups that are then absorbed into the company.

However, such a deal would give Apple more access to Twitter’s deep understanding of the social Web and pave the way for closer Twitter integration into Apple’s products.

Twitter has grown quickly, amassing more than 140 million monthly active users who generate a vast stream of short messages about their lives, the news and everything else. An Apple investment would give it the glow of a close relationship with a technology icon and would instantly bolster its valuation, which, like that of other startups, has languished in the wake of Facebook’s lackluster 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.

However, 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 US$600 million in cash on hand. This comes from the US$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.

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