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News

Apple to buy Twitter and/or EA?

Normally we’re used to the Apple rumour mill churning out stories about unlikely new products – there was one this week that looked like a new netbook but turned out to be an art project made of wood. So it was quite surprising to see a story surface about Apple being involved in a couple of interesting takeover bids. TechCrunch’s Michael Arrington has been reporting that there have been rumours floating around stating that Apple is interested in purchasing Twitter for $700 million in cash. The other rumour involves the takeover of games company EA.

For a lot of companies, takeovers are used to help alleviate debt or to ingest talent. Apple is famous for applying the latter (PA Semi). As Apple has a stack of cash built up and Twitter has yet to find a way to be profitable (despite some 25 million users) we don’t see any proposed takeover as a means to make money (unless Apple comes straight out and charges everyone for using it), but it could be a way for the Cupertino company to extend MobileMe, push advertising, or generally snoop on what people want in the computer market place. Let’s face it, most companies would quite happily spend $700 million to find out exactly what 25 million people really think of their products and services.

The EA rumour is interesting for different reasons. The iPod touch has been touted as a gaming device, even though it will run the majority of iPhone apps. So, should Apple wish to make even greater inroads into the mobile gaming market then the talent at EA could certainly help with that. But again, this isn’t as cut and dry in logical terms as the PA Semi buyout was.

Of course, the upshot of all of this is that takeover bids can seem to have a surprising affect on stock prices, both for the company who is buying and especially for the one selling. So before we get caught up in the hype we should double check that this rumour isn’t also made of wood…

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