A week back in the saddle, Twitter CEO Jack Dorsey is cracking the whip.
Twitter will lay off up to 336 employees, or about 8 percent of its workforce, as it looks to streamline its operations, the company announced Tuesday.
This is the first major business move by the company since Dorsey became permanent CEO on October 5. Dorsey, who was the company’s first CEO before he was pushed out seven years ago, had been interim chief executive since July.
The social network, known for the brevity and speed of users’ posts, has been wrestling with ways to increase the number of users and to keep them engaged.
Twitter has 4,100 workers around the world, half of them engineers and the rest spread among administration and marketing. The layoffs will be felt across the company, Dorsey indicated in a filing Tuesday with the US Securities and Exchange Commission.
“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 the filing. “And the rest of the organization will be streamlined in parallel.”
Jack is back at Twitter (pictures)
During the second quarter, Twitter’s monthly active users stood at 316 million, up 3 percent from the previous quarter and less than the 400 million such users of rival Facebook’s Instagram. That puts Twitter in a bind since advertisers are more interested in spending money on larger audiences.
To boost its appeal to the masses, Twitter has been rolling out new features. Last week, for instance, it unveiled Moments, which offers a curated selection of tweets and discussions for people who don’t want to follow a vast number of accounts. Other updates, made over the summer, include an option for longer direct messages and the ability to buy products directly from a tweet. Dorsey has talked about a robust product road map for 2016 but has yet to offer specifics
Analysts and investors have long contended that Twitter’s staff had grown too big. Still, some pointed out that layoffs have their limitations. Cutting jobs suggests that a company doesn’t know what else to do, Edison analyst Richard Windsor said Monday in anticipation of layoffs at Twitter.
“What I would have preferred to see is the removal of engineers from the mature part of the business and their re-employment on the big new strategy that will bring Twitter back to growth,” Windsor said. “Simply getting rid of them makes it look like that the big new strategy to return Twitter to growth does not exist.”
The cuts were expected after the San Francisco-based company reportedly opted not to lease up to 100,000 square feet of additional space across from its headquarters.
Analyst Shebly Seyrafi with FBN Securities cast the layoffs in a more positive light, calling this a “one-time” move to “clean the slate and right-size” Twitter. Seyrafi also noted that Moments had been garnering generally positive reviews.
Twitter’s stock rose more than 5 percent Tuesday to around $30.35 after the news of the impending layoffs hit. Since the start of April, the stock has dropped from about $52 a share.