Apple buying Twitter is not such the uninteresting proposition it’s been called, for instance by Dan Frommer’s piece yesterday Why Apple Won’t Buy Twitter.   With $29b in cash, they have a pile of cash which could be deployed over several strategic acquisitions to morph themselves to into a tech giant that could become the dominant tech/media competitor to Google.

What’s the prize for Apple?  For one, a revaluation to Google PEs and possibly higher.  This would build on the current decent PE of 23, then adding a new layer of high growth potential with now internet search advertising and media to Apple’s existing businesses.  Apple as a tech media business, with iTunes, iPhone, and Twitter/Twitter search as a triple platform is a winning plan.  I’d venture to guess that if advertising were in place on Twitter Search now, the eCPMs would kill AdWords at the moment.  Google primarily earns click revenues from it’s first page of search, which suggests the “deepness” provided by Google’s search results is not required for ad revenues, it’s only the first couple of pages that matter.

In an Apple acquisition, Twitter should remain a separate brand and act as a separate division of Apple.   The expansion of Apple’s business is where the value lies for Apple, rather than in the incorporation of Twitter into iPhone, MobileMe, etc.  I agree with Dan Frommer, that makes no sense.

Here’s a high level look at each company:

Google is arguably still in the best position to monetize Twitter immediately, as it fits into their existing business.  However, the Google brand might eclipse the Twitter brand, which would minimize the overall value in the long term because the “now internet” growth could very well be inhibited or forgotten when Twitter is gobbled into the intestines of the Google acquisition engine.