Salesforce CEO says company will not bid for Twitter
Salesforce.com Inc.'s chief executive Marc Benioff said on Friday he had ruled out bidding for Twitter Inc., a decision that appeased Salesforce's investors but raised questions about Twitter's future.
Salesforce, which is focused on cloud-based sales and marketing software, was the latest potential suitor to walk away from Twitter and appeared to bring the current round of acquisition talks to an end, sources familiar with the situation said.
That leaves the company and CEO Jack Dorsey to chart an independent course in the face of stagnant user growth, heavy losses and mounting competition from the likes of Instagram and Snapchat.
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"In this case we've walked away. It wasn't the right fit for us," Benioff told the Financial Times in an interview, saying there were many reasons the fit was not right, including price and the culture of the company.
A spokeswoman for Salesforce confirmed the comments and said the company had nothing further to add. Twitter declined to comment.
Twitter's shares fell five per cent to $16.88, while those of Salesforce rose five per cent to $74.27.
A potential acquisition of Twitter had weighed on Salesforce's stock since news broke on Sept. 23 that it was vying for Twitter.
Twitter had planned to wrap up any sale discussions by the time it reports earnings at the end of October, and other companies that had expressed some interest in a deal - including Google and Walt Disney Co. - have also taken a pass, sources told Reuters earlier this week.
"It means they have to go it alone, at least for now," said Jan Dawson, chief analyst with Jackdaw Research.
Growth stalls
As an independent company, Twitter may need to address its unusual leadership situation, analysts said.
Dorsey also serves as CEO of digital payments company Square Inc and has split his time between the two companies since he returned as Twitter's permanent CEO about a year ago.
Investors are likely to pressure the company to appoint a "full-time" chief executive, said SunTrust Robinson Humphrey analyst Robert Peck.
"The most common question we receive from investors is given the struggling turnaround, doesn't the company need a full-time CEO?" Peck said.
Dorsey sent a memo to employees earlier this month calling the company "the people's news network," and rallying them to "deliver a better Twitter faster."
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Twitter enjoyed a period of explosive growth in both users and revenues after its founding a decade ago, but growth has stalled over the past several years.
Both Facebook Inc.'s Instagram and Snapchat now boast more users than Twitter by most measures, even though they are much newer, and advertisers have begun to migrate their ad dollars accordingly.
The company missed Wall Street's sales expectations in both the first and second quarters of 2016, according to Thomson Reuters StarMine, and has yet to produce a net profit in 11 quarters as a public company. It will report third quarter results Oct. 27, which SunTrust analyst Peck said he expects to be weak with monthly active users flat or down.