BUSINESS BLOGS
BUSINESS BLOGS
category: business
24 Nov 2008

The inevitable is happening: Google to lay off people, up to 10,000 affected.  Here is a look at Google’s headcount:

Google reports to the SEC that it has 20,123 employees but in reality it has 30,000. Why the discrepancy? Google classifies 10,000 of the employees as temporary operational expenses or “workers”. Google co-founder Sergey Brin said, “There is no question that the number (of workers) is too high”.

So who has been cut?

Google has been quietly laying off staff and up to 10,000 jobs could be on the chopping block according to sources. Since August, hundreds of employees have been laid off and there are reports that about 500 of them were recruiters for Google.

Google is the Web bellwether, so in a way, it’s good that they get this done to start the recovery.   The longer Google sought to avoid the inevitable, the harder the landing.  The only question now is: how steep is the decline and when will the landing come?

Still: madness.  10,000 people laid off from a company that generated $17B last year in revenues… with $10B in cash… but with a stock at 40% of its year-ago high, you knew this was coming.

category: business
24 Nov 2008

What to make of this rumor that Facebook was about to acquire Twitter for $500M in stock?

1 - Facebook did not want to do this deal, if it did, it would not offer $500M of stock at a $15B valuation when everyone now pegs Facebook’s value at $5B most.  After all, most media companies are at 33-50% off their year-ago prices.  Facebook would be no different.  Even at the time, MSFT never said “We think Facebook is worth $15B”, it was a deal to mark its territory and if those were Facebook’s rules of engagement, it was worth it to them.

2 - Facebook is wiser to launch something internally than to acquire Twitter and integrate it.  I am no programmer, but I am not sure how well Ruby on Rails (which Twitter was built on) with Facebook’s platform.  Maybe it is a perfect match, who cares, we’re talking $500M.  Mind you, it’s in stock.

3 -If I were Twitter’s VCs, I would certainly not even entertain this deal.  Neither Facebook nor Twitter are going to become liquid investments any time soon… but finding a “greater fool”to come around and pay something for Twitter to justify their recent $100M valuation is easier than finding anyone to make the Facebook investment turn to cash.

4 - If I were Facebook’s VC’s, I’d seriously get my head checked for thinking that giving up $500M in stock is smarter than investing $5M (at most) to build something internally.  Come on people.

5 - I don’t buy this notion that “next year Twitter will have a revenue model” - Facebook said that two years ago.  Then Beacon came and went.  No comment.

6 -Social media as a business model or platform is dead.  Those who disagree sound awfully similar to those who argued last year that the US economy was resilient and someone would come and pay $1 more for their condo.  At some point, logic and common sense trickle back into the landscape no matter how much resistance there is.

7 - Ultimately, this says that Twitter is not a $500M company and Facebook is not a $15B company.  Otherwise, the deal would have been made.