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Twitter To Cut 9% Of Its Workforce, Plot New Path After Merger Fails
Twitter To Cut 9% Of Its Workforce, Plot New Path After Merger Fails

Twitter plots new path after merger talks fail saying it has a path to growth and profitability, even as the struggling social network unveiled hefty job cuts and more losses after talks to find a buyer collapsed.

The company said it would cut nine percent of its workforce after another money-losing quarter, but suggested it could reach profitability for the first time in 2017.

Analysts however remain skeptical about Twitter’s outlook for expansion, expressing concerns about its ability to entice users beyond its core base.

“We see a significant opportunity to increase growth as we continue to improve the core service,” chief executive Jack Dorsey said in the earnings report.

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“We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth.”

Twitter reported a net loss for the quarter of USD 103 million, compared with a USD 132 million loss a year earlier.

Revenues meanwhile grew eight per cent to USD 616 million, most of that from advertising.

The key metric of monthly active users rose only modestly to 317 million from 313 million in the prior quarter – a growth pace that has prompted concerns over Twitter’s ability to keep up in the fast-moving world of social media.

Twitter said the restructuring “is intended to create greater focus and efficiency to enable Twitter’s goal of driving toward (net) profitability in 2017.”

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The company was widely reported to be in talks to find a buyer, and it held meetings with Google parent Alphabet and cloud computing giant Salesforce.

But no deal materialized, and Salesforce said Twitter was not a good fit for the group.

Separately, Twitter said it would be discontinuing its looping video application Vine in the coming months while noting that users would “still be able to watch all the incredible Vines that have been made.”

Even though Twitter has never posted a profit, Dorsey said the latest quarterly results show upbeat signs.

“The key drivers of future revenue growth are trending positive, and we remain confident in Twitter’s future,” he said.

The cuts would amount to about 350 jobs based on the Twitter website’s headcount of 3,860 employees worldwide. Twitter will incur a charge of USD 10 million to USD 20 million for the reorganisation.

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Twitter shares rose 1.6 per cent to USD 17.57 in midday trade after the results, which topped most analyst forecasts and after one financial blog reported that Walt Disney Co. had reopened talks on an acquisition.

In a conference call with analysts, Dorsey declined to comment on the speculation of a sale, saying only: “Our board is committed to maximizing long-term shareholder value.”

Twitter’s 2013 public offering was among the most anticipated in the sector, but after a brief rise, the shares have been slumping. Based on its most recent share price, Twitter’s market value is about USD 12 billion.