THE TWITTER IPO: CROSS-SELLING!

Facebook CEO Mark Zuckerberg recently joked at a conference that he would be the last person to advise Twitter executives on "now to make a smooth IPO". Before Facebook's IPO, executives increased the size of its offering and the price, despite some internal concerns about the strength of its ads business. While the offering was also haunted by technical challenges on the Nasdaq market, some critics blamed the stock's challenges on greed among Facebook's management.

Twitter chose Goldman Sachs as the lead underwriter for its offering, over the Morgan Stanley team that advised Facebook, according to people familiar withe the decisions. Twitter is in the process of discussing which additional banks will be involved in the process. A number of other banks are already in the mix, including Morgan Stanley, Bank of America's Merrill Lynch and JPMorgan, who had leading roles on LinkedIn's IPO in 2011.

The discussions with the banks also include possible extension of credit to Twitter, people familiar with the talks said. Twitter would use the loans for general working capital and to pay taxes related to employees' stock options. In this respect, Twitter's IPO process appears tto mirror that of Facebook, which secured similar credit lines ahead of its own IPO last year.

By all external indications, Twitter's ad revenue continues to grow, particularly on mobile devices. Twitter's revenue is sealed inside its confidential filing, but analisyst firm eMarketer expects its ad revenue growth to a little under $1 billion next year, up form $583 million this year. It also purchased MoPub last week for $350 million, a mobile advertising firm.

NOTE:  investment (and commercial) banking "products" involved. Cross-selling, anyone?

[From the Wall Street Journal, September 2013].
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MORE ON THE CREDIT CRUNCH IN SPAIN

Based in the small town of Esquivias south of the capital, Guitarras Manuel Rodríguez and Sons turns out more than 5,000 handcrafted flamenco and classical guitars every year, along with a small range of other wooden instruments. Despite the emphasis on tradition and craftsmanship, this is a capital-intensive business. The work floor is dotted with heavy machinery.

Starting a company such as this, says co-owner Manuel Rodríguez, would be almost impossible in Spain’s current economic climate: “If you go to a bank today, no one will give you credit. And even if they gave you credit, they would demand a big deposit and would demand eight or 10 per cent in interest”. Similar complaints can be heard in small and midsized businesses up and down the country, and are raising concern not just within the Spanish government but within the European Central Bank in Frankfurt.

In the five years since the crisis started, no fewer than 450,000 small and medium-sized enterprises have gone under, says Jesús Terciado, the president of Cepyme, the Spanish association. Researchers at Deutsche Bank, meanwhile, point out that last year almost 20 per cent of all loan applications by Spanish SMEs were rejected – twice as many as for large corporations. 

Source. Tobias Buck. “Spain threatened by resurgent credit crunch”, Financial Times, 4 April 2013.

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