Job Cuts, Revival Plans Ahead, Dorsey's Twitter Is Changing

by CXOtoday News Desk    Oct 14, 2015

dorsey

After returning as CEO, Jack Dorsey promised to make Twitter more accessible to the masses next year. And looks like Tweeter is already changing under his leadership. The recent from the microblogging company is that Dorsey readies to revive growth, as Twitter plans to lay off up to 336 employees, or about 8 per cent of its workforce.

The layoffs, primarily in the company’s engineering and product functions, come a week after he took over as permanent chief executive. Twitter has about 4100 employees globally as of June 30.

“The roadmap is also a plan to change how we work, and what we need to do that work. Product and Engineering are going to make the most significant structural changes to reflect our plan ahead. We feel strongly that Engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce,” Dorsey said in a letter to employees. “And the rest of the organization will be streamlined in parallel.”

Some investors said Dorsey was a more effective leader now than some years ago, when the co-founder was fired from his first stint as Twitter CEO. Reports suggested Dorsey’s attention was on other projects, and he struggled to manage frequent outages during a period of exploding growth.

Read more: Is Jack Dorsey Twitter’s ‘Permanent’ CEO Now

“No one knows the product better than Jack,” SunTrust Robinson Humphrey analyst Robert Peck told Reuters, citing faster product rollouts since Dorsey took over the top post on an interim basis since July.

”Dorsey’s success with Square gives him renewed clout to lead Twitter, said Gartner analyst Brian Blau. “He’s already invented a whole new category,” said Blau. “That gives him a lot of credibility when it comes to what to do next with Twitter.”

However, FBN Securities analyst Shebly Seyrafi said the company needed to focus also on “rationalizing sales” along with engineering to achieve its margin targets.

Dorsey, who was appointed Twitter’s interim chief executive in July after Dick Costolo resigned, has been straight-forward about the company’s problems.

Twitter’s second-quarter growth in average monthly users was the slowest since the company went public on November 7, 2013. Its stock nearly tripled to a record high of $US74.73 in December 2013, but has fallen about 60 per cent since. “The general thinking is that Twitter has a product problem, which is why they picked Jack to come in. You would normally not be cutting in engineering if you have a product problem. So I scratched my head a little bit on that,” Seyrafi told Reuters.

Since Mr Dorsey took over as interim chief executive, Twitter has rolled out a “buy now” button that allows users to make purchases and a feature that highlights the best tweets and content.

While some analysts believe cuts in the engineering department could hurt the company’s “ability to continue growing at a robust pace”, Twitter said it expected about $US10 million-$US20 million in severance costs and $US5 million-$US15 million in restructuring charges and will yeild much better results in the fourth quarter.