No part­ner in sight, Twit­ter faces tough solo choices

Kuwait Times - - TECHNOLOGY -

The ap­par­ent lack of in­ter­est in Twit­ter Inc by po­ten­tial suit­ors may force the so­cial me­dia com­pany to con­sider a route anath­ema to as­pir­ing tech star­tups: a ma­jor re­struc­tur­ing and cut­ting some its nearly 4,000 em­ploy­ees.

The pop­u­lar but money-los­ing mi­cro-blog­ging ser­vice spent ag­gres­sively on prod­uct devel­op­ment and mar­ket­ing in re­cent years, bet­ting that it could af­ford to post losses as long as it at­tracted new users. But that growth stalled this year af­ter it ex­ceeded 300 mil­lion ac­tive monthly users, less than a fifth of Face­book Inc’s users and be­low Face­book’s Instagram.

Ear­lier this month, Twit­ter hired bankers to ex­plore sell­ing it­self. Tech­nol­ogy and me­dia com­pa­nies in­clud­ing Sales­ Inc, Walt Dis­ney Co and Al­pha­bet Inc’s Google looked at the com­pany but ul­ti­mately passed on buy­ing it. The aborted sales process - and the com­pany’s strat­egy as an in­de­pen­dent com­pany - will be back in the spot­light when Twit­ter re­ports earn­ings on Oct. 27. The com­pany de­clined to com­ment. “It’s go­ing to take some bold moves here,” said David Hsu, a man­age­ment pro­fes­sor at the Univer­sity of Pennsylvania’s Whar­ton School, sug­gest­ing job cuts may be an op­tion. “It takes a very lean staff to main­tain the core Twit­ter as an ad­ver­tis­ing and mes­sag­ing plat­form,” Hsu said.

Ac­cord­ing to SunTrust an­a­lyst Robert Peck, Twit­ter could cut 10 per­cent of its work­force and save about $100 mil­lion a year. Ma­jor lay­offs, though, could hurt the com­pany’s im­age in San Fran­cisco, where the com­pe­ti­tion for en­gi­neer­ing tal­ent is fierce. The com­pany may look first at cut­ting sales and mar­ket­ing, an area in which it is spends more than twice as much as its ri­vals to earn each dol­lar of rev­enue. “Twit­ter’s cost struc­ture was orig­i­nally built to grow into a much larger user base,” said Peck. “But with user growth stag­nat­ing, the com­pany likely needs to re­duce ex­cess costs.”—Reuters

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