Twitter up for sale?

Rather fascinating set of news results out today - Twitter is apparently having "Low Level* " talks about selling, according to the WSJ:

Executives at both Facebook Inc. and Google Inc., among other companies, have held low-level talks with those at Twitter Inc. in recent months to explore the prospect of an acquisition of the messaging service, according to people familiar with the matter. The talks have so far gone nowhere, these people say.

But what's remarkable is the money that people familiar with the matter say frames the discussions with at least some potential suitors: an estimated valuation in the neighborhood of $8 billion to $10 billion.

This for a company that, people familiar with the matter said, had 2010 revenue of $45 million—but lost money as it spent on hiring and data centers—and estimates its revenue this year at between $100 million and $110 million.

While rumours of sales and Twitter constantly swirl around, there are 3 other factors that make this more interesting than usual:

(1) Twitter's initial growth is slowing, and it must have occurred to Twitter's backers, watching the froth around Huffington Post, Facebook and Groupon et al, that there is a valuation bubble at the moment, and, as in all bubbles, there is a New Economic paradigm that allows rational economics to be set aside for valuation purposes - WSJ again:

"Are these prices justifiable based on financial multiples? No," said Ethan Kurzweil of venture capital firm Bessemer Venture Partners. But these start-ups are building social services and have lots of data about their users and "the market is valuing that mightily right now."

...So, Carpe Diem, Carpe Dollars and all that

(2) Twitter owns a bit of strategic turf in the New Media landscape that gives major advantage to Non-Facebook players if they own it, and conversely protects Facebook if they own it (even if its to strangle it) - ie there are buyers who have Strategic Needs (aka will pay over the odds)

(3) But most tellling is when Near-Insider Trading occurs - when smart people with ears very close to the sandy, hilly ground buy up $80m in Twitter stock, you know this is no ordinary time

Update - for the first time in the current Bubble, there has been a serious bat-back of the high valuations, with the WSJ weighing in and the standard counters, but we would reflect on the point that all bubbles begin with a New Economic Paradigm argument that This Time It Will Be Different and normal valuations don't apply. (Update - Nice post by Elad Gil expands on this in more detail)


*They are meeting in the basement, perhaps?