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Twitter’s 2014 Forecasts Vary Widely

Posted on Wednesday, Jul 18th 2012

Where several online startups are rushing to go public, there are a few others that would much rather enjoy the freedom of remaining private. Social media giant Twitter is one company that seems to prefer the private route.

Twitter’s Financials
In a recent interview with the Los Angeles Times, Twitter CEO Dick Costello confirmed that given the “truckload of money” Twitter has in its bank accounts, he does not see the need to go public. Twitter’s management team believes that by staying a private enterprise, they will be able to establish stronger control over the company’s growth plans and will not be driven by quarterly performance analysis.

Though Twitter’s financial performance is not published, recent market reports suggest that the company estimates to be well on its way to earn $1 billion in revenues by 2014. That seems to be a very aggressive projection given that revenues last year were rumored to be around $140 million-$160 million. In fact, those projections would be significantly higher than analyst projections. According to eMarketer, Twitter will be able to generate just $540 million in ad revenues by 2014, and because ad revenues account for the majority of the company’s revenues, the $1 billion target does not look easily achievable. Also, like many online players, Twitter has yet to turn in profits.

Twitter’s Mobile Focus
Twitter now has more than 500 million registered users, of whom 140 million are active users who log in to their Twitter accounts daily. Twitter’s mobile adoption is on the rise, although it varies greatly by region. Nearly 80% of the site’s users in Japan and the United Kingdom access the site through mobile devices. In other parts of the world, mobile device usage is lower at slightly more than 50%.

Twitter remains focused on improving these statistics. Earlier this week, it launched a new app for BlackBerry devices to give a richer experience for Tweets. The app comes with with features such as the ability to expand a Tweet to see details, view images from pic.twitter.com in full resolution, and view RIM maps for geolocated Tweets. It’s also easier to see how a single Tweet fits into a broader conversation from the details view, which includes previous Tweets and replies. The app also caters to languages that are written right-to-left, such as Arabic and Hebrew. The Middle East is a fast-growing market for Twitter. Last month, the number of users in Saudi Arabia alone grew 3,000% over the previous month.

Last week, Twitter released a special app for Nokia’s Series 40 feature phones. Users will be able to download Twitter for Nokia in the Nokia Store, and using their Nokia S40 devices, they will be able to sign up for Twitter directly from their phones.

Over the past few months, Twitter has also redone its user interface on the mobile app. The new mobile app now supports more browsers on different devices, is able to accommodate multiple input methods, builds layouts with pre-CSS3/HTML5 standards, optimizes for browsers with JavaScript turned off, scales more evenly across resolutions, and minimizes page sizes for slower networks.

Twitter’s Acquisitions
Twitter hasn’t slowed down on acquisitions, either. Last quarter, the company acquired personalized email marketing service, RestEngine. RestEngine’s service will be able to help Twitter deliver email digests of Tweets to users and will complement its earlier acquisition of Summify. RestEngine is best known for helping Facebook game companies to deliver high-open-rate emails by including data like the recipient’s score, level, and a list of friends who were playing.

In April 2012, Twitter also acquired social analytics player Hotspots.io. Details of Hotspot’s capabilities are not widely known as the company was still in a private beta stage. Twitter should be able to use Hotspot’s analytical tool capabilities to develop analytics tools for its advertising and publishing partners.

The 2014 forecasts, in which Twitter touches a billion in revenue, will require more acquisitions that bring in serious and new monetization models, especially subscriptions. One strategy could be to assemble social media marketing services like HootSuite and HubSpot that monetize nicely under the Twitter umbrella.

The company’s market cap certainly offers that option.

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