Perry Glasser

Twitter, HuffPo, AOL, Facebook — The Fever Rises

In Business, Economics, Finance, Wall Street on February 10, 2011 at 11:44 am

A few weeks ago, this commentator raised some doubts about Goldman-Sachs’ valuation of Facebook for purposes of selling shares to non-US investors, bypassing SEC regulations and generally setting the gnomes of the financial world mounting each other in a frenzy of expected merger and acquisition commissions. Their kids would not need to get into Harvard or Yale—they’ll buy those asshole schools out. Get quotes on available tropical islands! What are Learjets going for?  Can I get my Rolex out of hock?

Some friends were quick to correct my doubts and mentioned the intangibles that I was omitting from the equation.

Uh-huh.

$10 per user?

We don’t need no stinkin’ sales! We got eyeballs! We got sticky sites! We spit on revenue! P-too-i!

By God, Wall Street hasn’t seen anything this promising since the good old days of the first Internet bubble. Break out your sock puppets! No one will ever go grocery shopping again.   Heck—why go outdoors at all?

You want to examine Facebook’s business model, you go to hell! you lousy m*****f**kers!

FB pays their goons who write code with stock options—as little cash as possible. The goons change the site to create white space for more ads. You can buy the equivalent of Facebook dollars for Facebook games. Sure. Why not invent a new currency? You need to go to more pages to accomplish what you used to do from one page. More page views, more revenue. More games, more revenue. Never mind they piss off subscribers by making them opt out every time they dream up a new scheme to sell what they thought was private information. They have 500 million subscribers in seven years! There are no limits! At this rate, Martians will need to join Facebook by 2035 because every earthling will have signed up.

Facebook sells ads and information to marketers, the breed of hucksters who are responsible for the tons of junk mail you throw into the landfill annually. What else can Facebook sell? Marketeers? Yeah! They sell stuff, too!

They sell ideas and they instill desire. They don’t actually make anything, mind you, that’s for 3rd world countries, you know, the crappy places like China whose currency is displacing the dollar all over the world, or Brazil, or any other place where the dumb m*****f**kers haven’t figured out that the big bucks go to financiers and salesmen. Shit, they’re selling the New York Stock Exchange to Germany. They’ll sell their grandmothers with a lease-buyback clause for Granny’s apple pie, if they can get a premium for Grandma’s sorry butt.

This week we see the Huffington-Post sold to AOL for a mere ten times annual earnings, $315 million dollars, part of AOL’s desperate strategy to become a media company, a strategy that failed when it bought Time-Warner, failed when it bought Patch, failed when it bought Endgadget, and failed when it THOUGHT about buying Yahoo.

Anyone notice a pattern here?

HuffPo started out as a left-y magazine of opinion that featured literate celebrities hiring ghostwriters to spread their “brand” (meaning “name”). After that, other paying deals would fall into place. More recently, HuffPo has emphasized to non-content slideshows of celebrities: and why not? Every slide is a hit! Every hit is a justification for higher ad rates.

If AOL mixed a boy scout troop with a girl scout troop in tents in the woods, they’d get chastity. The embarrassing 2000 Time Warner deal stank up the joint so badly that $99 billion was lost in two years, and by 2003 Time Warner shed AOL’s name in a vain attempt to get stockholders to forget the sucking sound of their money going down the black hole of a failed merger.

For those who need to know, in the M&A game, fair valuation generally lingers between 3 and 5 times annual earnings. In other words, you buy a company, the resulting entity expects to recoup its investment in 3 – 5 years. The key word is “fair,” and the finance team that puts together the deal has a vested interest in inflating future discounted figures as high as possible. The higher the sales price, the higher the commission, and it just must be an accident that in financial terms, like marriage in America, half of all mergers fail.  Seems the valuations are too high—somewhat like newlywed expectations.

This morning’s news has the financial world stiff-nippled about the possible value of Twitter, which rumor has at as much as $10 billion.

Now, Twitter limits messages to 140 characters. It started as a means for dull-witted teenagers to stay in constant touch with other dull-witted teenagers, broadcasting about rock-your-world moments about life at the mall. Why text just friends when a breathless world awaited news about your eyeliner, the cute guy at the food court, and your misery having to do with pimples? But unlike cell phone texts, tweets could bear links, and the day hashing was introduced, the kids at the mall were left in the dust. Some, we gather, actually talk to each other.

Trendlines? Channels? Broadcast?

Manna to the marketeers! O, mamma, I feel the heat coming on!

We have Twitter users with tens of thousands of followers who generate no original content. They retweet. They retweet a lot. It’s an endless daisy chain on Viagara of non- news. If you watch TV just to see the commercials, then Twitter is for you. Just remember, this ain’t the Super Bowl.

Rumor has it that there are only 7 original tweets and they have been retweeted 700 billion times each, circling the globe again and again in minutes, igniting smart phones with messages that link users to website where…

Marketeers sell stuff.

Stuff made in China.

That’s gotta be worth $10 billion, roughly $3 for every human being on the planet.

Sign us up!

Remember, the last elephant crowding into the exit brings down the house. You didn’t have to be a software engineer to suffer in the recession of 2001-03; you didn’t have to own a house to get hurt when the housing bubble burst.

Stock up on canned goods.

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