Twitter cuts aim to bring profit.
Socialmedia site to lay off 350 employees andwill endVine service for short videos
SAN FRANCISCO — Twitter wants to soar to new heights, but as the tech firm lays off hundreds of employees and shuts down video app Vine, analysts and investors remain wary about whether the struggling social media company can grow fast enough.
Early Thursday morning, Twitter said it plans to cut up to 9 percent of its global workforce, an estimated 350 employ- ees. It’s the second major round of layoffs for Twitter since cofounder Jack Dorsey returned last year in a bid to turn around the company.
In a letter to shareholders, Twitter said the restructuring plan “focuses primarily on reorganizing our sales, partnerships and marketing efforts.” The 10-year-old tech firm did not specify how many of the layoffs would come from its San Francisco workforce.
Twitter also announced that it was shutting down Vine — a video app that allows users to share six-second clips that automatically replay — in the coming months. Twitter purchased Vine, which has more than 200 million monthly active users, before the app launched in 2012.
The company’s announcements came on the same day it reported quarterly earnings and revenue that beat Wall Street’s expectations, a sign the tech firm could be moving in the right direction.
Consolidating some of its sales teams could help Twitter maximize the amount of ad dollars it receives from major brands, analysts say. Mean-
while, Dorsey is under more pressure to fix a company that has struggled to grow its number of users and revenue.
“The question is always going to be will they have enough time to execute?” said Debra Aho Williamson, an analyst with eMarketer. “Is there going to be an acquisition that happens, or will advertisers and users not wait for them to get to where they want to be?
“They’re probably moving as fast as they can. But is it fast enough? That remains to be seen.”
Dorsey said Thursday in a conference call that Twitter is cutting its workforce as part of the firm’s goal to become profitable in 2017 and simplify how it operates.
It’s still fully funding efforts that will help drive user and revenue growth.
“We’re getting more disciplined about how we invest in the business,” he said.
The 39-year-old Twitter CEO, who also runs mobile payment company Square, kept tight-lipped about speculation that the tech firm is looking to sell itself to another company. The board is committed to “maximizing long-term shareholder value,” Dorsey said, but he declined to com- ment further on the topic.
Twitter has been betting big on live video. It purchased live video streaming app Periscope last year and has been striking deals to stream major events, from Thursday night NFL games to coverage of the presidential debates. But Twitter also faces competition from other social media companies, including Facebook and Snapchat, that are also popular places to view and share videos.
“We’re focused on building the most useful, open and comprehensive news network on the planet, and this is the fastest way to see what’s happening, and our product is already revolutionary,” Dorsey said.
Twitter’s stock was up more than 4 percent at $18.04 per share in premarket trading but dipped back down to $17.40 at closing, a 0.6 percent increase.
After lowering its revenue forecast for the third quarter, the company reported sales of $616 million, an 8 percent increase compared with the same period last year. Analysts surveyed by Thomson Reuters ex- pected the company to report revenue of $606 million from July to September.
The tech firm posted a loss of 15 cents per share, better than the loss of 19 cents per share predicted by analysts. Excluding certain expenses, Twitter reported earnings of 13 cents per share, above the 9 cents per share expected.
Twitter increased its monthly active users to 317 million in the third quarter, up from 313 million during the second quarter, which the firm attributed to improvements to the home timeline and notifications. The company reported a $103 million net loss in the third quarter.
With a takeover failing to come to fruition, some analysts expected that the company would take measures to cut costs. Salesforce. com, Walt Disney and other companies were reportedly interested in buying Twitter, but backed away from making a bid.
Twitter declined to elaborate on why Vine was shutting down and the exact day the service will end. Marketers and ad buyers who pay social media stars to promote their products have been directing their dollars to other sites, including Facebook and Instagram, The Wall Street Journal reported in March.
“These things happen in social media,” Williamson said. “You can be a darling one day and not so good looking the next day.”
Twitter executives did not specify how much money the company would save from its restructuring plan, but noted that the bulk of savings will happen next year.
Bob Peck, an analyst with SunTrust Robinson Humphrey, wrote in a note Tuesday that Twitter could save $50 million to $100 million if it cut about 8 percent of its workforce.
As of June, the firm employed 3,860 workers in more than 35 offices worldwide, according to information listed on its website.
This isn’t the first time that Twitter has announced major layoffs to cut costs. In October 2015, Twitter announced that it would lay off up to 336 employees, or 8 percent of its workforce. Vine co-founder Rus Yusupov, who was part of the first round of layoffs, tweeted his thoughts Thursday in fewer than 140 characters.
“Don’t sell your company!”
“These things happen in socialmedia. You canbe a darling oneday andnot so good looking the next day.” — DebraAhoWilliamson, analyst with eMarketer