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Is Twitter's Valuation Real?

Word that Twitter raised another $80 million, along with new valuations of $8 billion-to-$10 billion, has everyone talking tech bubbles -- or at least reassessing the value of today's tech leaders. "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," remarks The Wall Street Journal.

"So a $10 billion valuation would be more than 200 times the company's revenue," Deal Journal calculates. "Help me out here, folks: Has any real business ever been slapped with such a high multiple?" Hot on the heals of a $200 million round of funding -- at a measly $3.75 billion valuation -- Andreessen Horowitz just invested the $80 million in Twitter via purchasing stock in private secondary markets, Boomtown reported on Wednesday.

"The investment by the firm gives more perceptual boost to Twitter, which is still trying to create a lucrative business model for itself, focused on advertising," writes BoomTown's Kara Swisher. At prices nearing $10 billion, The Journal is reporting that top tech companies have held "low-level" acquisition talks with Twitter.

"Are these prices justifiable based on financial multiples? No," Ethan Kurzweil of venture capital firm Bessemer Venture Partners tells WSJ. But, regarding all the data that Twitter is collecting from users, Kurzwell added: "The market is valuing that mightily right now.

"There are three companies that we know are interested in or 'hungry' for Twitter: Microsoft, Google and Facebook," notes Search Engine Land. "Facebook would have to use a combination of cash and stock with the promise of an IPO in 2012 to lure board members and Twitter executives to accept. Google and Microsoft could pay cash."

Read the whole story at The Wall Street Journal »

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