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All the News That Didn't Fit in Twitter's IPO Tweet

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Here's what we know and don't yet know about the most-talked-about IPO since Facebook.

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The folks at Twitter, where every story can be told in 140 characters or less, must have known that the company's IPO announcement would boil down to this: It's going to be the biggest Internet IPO since Facebook (NASDAQ:FB).

Talk about damning with faint praise. The Facebook IPO was seen as a fiasco, at least until a couple of months ago when its stock price finally started creeping up above the $30 mark, where it was supposed to have started more than a year before.

It looks like Twitter is working to avoid that comparison.

In part, the company has done this with a series of strategic acquisitions that shore up its position as an advertising platform with a strong mobile audience, a social media company with a solid multimedia presence, and even a reliable source of breaking news.

Part of it, let's face it, is dumb luck. When the company was created in March 2006, its founders decided Twitter was the perfect name for a service designed for "a short burst of inconsequential information," in co-founder Jack Dorsey's words. They arbitrarily decided that 140 characters was the maximum length that such a message should be.

They envisioned Twitter as a timely, event-driven micro-blogging site. They expected, or at least quickly recognized, the site's potential as a "second screen" that was used with television during favorite shows, sports events, and breaking news events.

But surely they didn't foresee in 2006 that a format of 140 characters or less would be peculiarly well-suited for reading or text entry on a smartphone.

That got Twitter a smooth transition to the mobile world, and its recent acquisitions have made it clear that the company's management wants to make the most of it.

Just this week, Twitter announced that it had acquired MoPub, a mobile advertising network, for a reported $350 million in privately-held Twitter stock. The company is expected to incorporate MoPub technology into its own advertising system to in order to deliver advertising targeted to users' mobile history and current location.

This type of real-time bidding exchange is explained in depth in a blog post by Antonio Garcia, a former Facebook employee and creator of the Facebook Exchange ad system. Garcia calls it "the ultimate culmination of the various ad technologies that have grafted themselves onto the Internet in the past 15 years."

Also in 2013, Twitter acquired two social media analytics companies, Trendrr and Bluefin Labs. Bluefin delivers "promoted tweets," that is, messages related to commercials currently airing on television, to users who are tweeting about that program. Trendrr creates tools used by advertisers to track and evaluate social media campaigns.

Other acquisitions demonstrated Twitter's eagerness to flesh out its feeds with multimedia. Last year, these included Vine, a micro-video social network, and We Are Hunted, a showcase for new music.

Now to what we don't know about Twitter's IPO:

The company submitted its IPO filing "confidentially," under new rules that permit a filer to postpone releasing its financial details until 21 days before it starts marketing the IPO.

That tells us only that Twitter hasn't yet reached the $1 billion mark in annual revenues, the upper limit for claiming the confidential status.

The research firm eMarketer estimates that Twitter will reach $1 billion in global advertising revenue next year, following about $583 million in the current year. It says more than half of that revenue will come from mobile advertising, despite the fact that the company had virtually no mobile revenue in 2011.

We won't know much about the bottom line until those financial documents are finally disclosed, but Twitter is believed to have become profitable only last year.

Twitter officially claims 200 million active users, but The New York Times says it has seen internal documents that indicate it is approaching the 300 million mark.

The IPO is expected to launch at the end of this year or very early in 2014. Goldman Sachs (NYSE:GS) is expected to be the lead underwriter.

And that's about all we know right now, but it's more than Twitter told anybody. The official announcement came in at less than 140 characters, complete with legal disclaimer: "We've confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale."

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No positions in stocks mentioned.
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