Report: Twitter Turns Down $500 Million Offer From Facebook

Twitter has turned down a $500 million acquisition offer from Facebook, according to a report published early Monday morning.

The supposed deal, uncovered by BoomTown’s Kara Swisher, had reached the point of “several weeks of serious talks” before falling through just recently. The reason? Mainly money, Swisher says.

Twitter execs seemingly believed it was worth taking a shot at creating their own revenue-generating system before giving up the company. And, BoomTown’s sources claim, the $500 million offer — which was in an all-stock form — was seen as being “inflated,” since Facebook’s actual valuation is said to be closer to $5 billion.

Still, any sale at this point would also inherit Twitter’s lack of revenue and estimated $75 million annual tab for all of the text messages it sends out free-of-charge to its users. That fact, no doubt, makes any deal slightly less sweet for a potential purchaser.

Of course, the whole thing could be a simple game of bargaining. “The question is, is it really a good idea to sell on the first chance you get?” one source told BoomTown.

And, sure enough, Facebook is expected to keep at it. So too are a handful of other large companies, including such big names as Google, Microsoft, or even Yahoo.

So did Twitter screw up by turning down the $500 million offer? Probably not. Unlike Yahoo and its infamous Microsoft mess-up, Twitter isn’t walking away at a dead end with no other offers in sight. It sure seems that it’ll have plenty of lucrative options down the road, if it chooses to go that route.

Do you think Twitter should take the bait and go for a sale in the coming year, assuming the price is right? Or do you think it’d be better off staying independent and trying to develop its own revenue model? The polls are officially open.