According to reports, Twitter is in ongoing talks to buy newsreader Flipboard in an all-stock deal valued at more than $1 billion.
Kara Swisher of Recode cites “multiple sources with knowledge of the situation” in her article. Twitter CFO Anthony Noto is apparently responsible for pushing talks which began at the beginning of the year. Twitter has come under growing pressure from investors to grow its audience, but the latest reports claim that talks have recently stalled.
Twitter would acquire company and talent
Although Flipboard and Twitter may not appear to be a perfect fit at first sight, one possible motivation is the experienced product team that Flipboard offers. Mike McCue, a well-known Silicon Valley entrepreneur and former Twitter board member, is thought to be one reason for the interest. He has a great reputation and is seen by many as a natural heir to current Twitter CEO Dick Costolo, who has come under increasing pressure from investors.
Investors are not happy about the rate of growth in the number of active Twitter users, and the company reported lower than expected sales and earnings this March. Twitter is exploring ways of enhancing its site and moving beyond its core service.
People are increasingly using Twitter as a source for breaking news, and the acquisition of Flipboard may drive an expansion in Twitter’s role as a news service.
Both companies struggling with growth
Despite the fact that Flipboard is backed by some of the most prominent venture capitalists in Silicon Valley to the tune of $160 million, the company has its own problems with growth. Sources familiar with the company claim that user numbers have recently leveled off, partially due to the fact that the app is no longer installed on Samsung smartphones by default.
Another factor is the increasing difficulty of attracting audiences, and some commentators believe that Flipboard has a limited appeal. Buying the company would not automatically boost Twitter’s own user base, which currently sits at 302 million people, and a large proportion of those users may already be on Flipboard.
Flipboard has been implementing similar strategies to Twitter, introducing video ads last year and “promoted items” more recently. If Twitter does not follow through on a deal, it is thought that Google and Facebook may consider buying Flipboard.