Kara Swisher reported today that Facebook offered to acquire Twitter for $500 million of its stock, in her post, When Twitter Met Facebook: The Acquisition Deal That Fail-Whaled. One of the reasons was the perceived over valuation of Facebook stock as the deal was not cash but Facebook’s perceived value of $500 million in their stock.  However, Kara wrote that, “more important, it seems, was a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues–there are none right now–as well as it had done at building its growth.”  There have been six million registrations, as reported in October, up 600 percent over the last year, for the San Francisco-based Twitter. However, so far the effort has focused on growth over revenue and there is actually no revenue at the moment.

Kara reported that “some sources at Facebook said Zuckerberg was becoming frustrated by the buzz Twitter was getting.” I guess he wanted to take over that buzz. At the same time, Zuckerberg called Twitter an “elegant model” and said that he was “really impressed by what they’ve done.” So he offered stock with no liquid value for a company with no revenue.  Perhaps the government should do this for bailouts and save the taxpayers real money.  On the other hand, it does seem appropriate that the consumer web Facebook should go after the consumer web Twitter.  Neither is designed for enterprise use but both have inspired a lot of enterprise tools such as the Twitter for business tools: Yammer, Present.ly, QikCom, and SocialCast that have been covered on The AppGap.  

It is hard to walk away from $500 million or even the $150 million that Kara reported Twitter felt was a more realistic value of the Facebook offering.  So I hope they made the right choice. Since no cash was offered, I can see some real concern by the Twitterites here. Kara closed with the comment that one Twitter source said: “The question is, is it really a good idea to sell on the first chance you get?”  More times that not, my experience is that you regret not doing it but we will just have to see.