Months ago, Twitter (NYSE: TWTR) released statements about interest in merger and acquisition activity. Yet, as of its most recent conference call, nothing has materialized and CEO Jack Dorsey remains mum on the issue.
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In this clip fromIndustry Focus: Tech,Dylan Lewis and Daniel Sparks explain what Twitter's lack of M&A action means for the company, why we're seeing so little commentary, and what long-term investors can learn from this case study.
A full transcript follows the video.
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This podcast was recorded on Nov. 4, 2016.
Dylan Lewis: Someother stuff with Twitter, they talkedbriefly, I wish that we had gotten some more commentary on it, about the M&A stuff. In hisintroductory remarks, Jack Dorsey said, "Our board iscommitted to maximizing long-term shareholder value. I don't plan to comment any furtheron the topic."I know I was hoping for something. If we go back maybe a month,a month and a half, it seemed like they werebanking on having a deal set by this conference call. They had kind of drawn a line in the sand of, "Bythe end of October, we want to come to our investors with something." Obviously, we famously sawDisney,Google, any major tech company,salesforce.com, decide to bow out and say formallythey weren't interested. I think some Twitter shareholders are probably pretty happy about that,but it kind of speaks to managementnot really having full control of what's going on, and maybe nothaving a great read on the business sometimes.
Daniel Sparks:Yeah, I think the lack of commentary,as you said, seemed to confirmtheir lack of control. It was interesting watchingall the offers, supposedly, come in. These were pretty major reports --New York Times, Wall Street Journal-- sothis probably really was happening. But to seeDorsey open up the calland give it such little commentary,just really leaves investors in the dark on whether they're reallypressing for sale, and what's going on here. So I think shareholders are probably expecting --I know I was definitely expecting more on that front.
Lewis:And you look at how that played out, some of the most successful open-and-shutacquisitions that have happened in 2016 have been ones that came out of nowhere, were announced, they went through thestandard regulatoryrigmarole, but they had their suitor,they had already agreed to terms,and then it was announced. When you see you company saying, "We're exploring this, we're interested in this, and we're kind of open to accepting anything," that's not nearly as firm. They'retrying to get the market excitedand stir up some more interest, perhaps. So, as you're watching from the sidelines,I think this Twitter example in particularis a great case study on whenmaybe you should not bank on a deal happening, because shares just flew all over the place on that speculation,and I'm sure some people were buying and sellinghoping to get a nice little premium on top of where shares currently were.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Walt Disney. Dylan Lewis owns shares of Alphabet (A shares) and Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Twitter, and Walt Disney. The Motley Fool recommends Salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.