• ZDNet, Tuesday, March 17, 2009 11:15 AM

Bernstein analyst Jeffrey Lindsay thinks buying Twitter would be a really bad idea for Web giants like Google and Yahoo, says ZDNet Editor Larry Dignan. In a research note, Lindsay calls Twitter a "pre-business," warning the Web giants against the perils of buying companies that may never forge a sustainable business model.

"Don't get us wrong -- we like Twitter and we think the concept of sending short open standard messages reporting on your activities is actually much more fun and more valuable than it sounds," Lindsay says in the note. "The problem is that Twitter falls into the broad category of new Internet businesses that are almost un-monetizable. Whoever buys it will likely have to operate it at a loss in perpetuity, or until the next cool web 2.0 social networking concept comes along and Twitter tweets no more. Sadly, this would not be the first time that a major internet company had made a bad deal."

Some history lessons: AOL acquired Netscape for $4.2 billion, Time Warner acquired AOL for $120 billion, Yahoo bought Broadcast.com for $5.7 billion, eBay acquired Skype for $4.1 billion, Google acquired YouTube for $1.65 billion, etc. And while some social networks make money-MySpace owes much of its revenue to a $900 million search deal with Google that doesn't look like it's going to be renewed -- "the fundamental issue seems to be that people just don't want to click on ads when they are engaging in social networking activities."

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