The help-wanted ad for Twitter Inc.'s new CEO might have to run longer than 140 characters. Simply listing the company's main problems eats up a considerable amount of space: Since its peak in 2013, its share price has been cut in half. It continues to bleed money while its debt has soared to $1.6-billion (U.S.).
Given that litany of woe, it wasn't a total shock when Dick Costolo, who served as CEO for five years, announced in June that he was stepping down from the top job. But investors who are hoping that new leadership will reinvigorate the stock may want to wait and see how this boardroom drama plays out before putting any more money into the company.
Costolo will continue to sit on the board while an executive search takes place, and is being replaced, for now, by an interim CEO, Jack Dorsey, who already has a day job as chief of mobile-payments company Square.
The "sloppy and confusing" transition, in the words of venture capitalist Chris Sacca, appears to signal that the board is impatient for change. And so it should be: Twitter lost $539-million (U.S.) in 2014 and fell short of expectations for first-quarter revenue.
But exactly what changes are required to put some bounce back into Twitter's stock? That's where things get tricky.
For starters, the company needs a leader who can artfully guide Wall Street's expectations back down to earth. In its current shape, the platform seems unlikely to ever attain the size of some social media rivals. Its 302 million monthly active users are only a fraction of Facebook's 1.4 billion, and the growth rate of its user base has slowed to around 18 per cent a year.
The company also needs someone who can bring costs in line with revenue.
While sales have been more or less doubling each year, Twitter has yet to turn a profit. The logical way to do so is by selling even more advertising, but the question is how it can do so in a manner that doesn't chase away users.
Dorsey, the interim CEO, insists the company is not shifting its strategy. So long as Twitter builds a platform that users love, advertisers will follow, he says. He has not yet specified, however, how the platform can pl ease one group without elbowing the other in the ribs.
Most analysts now regard Twitter as a "hold," but a significant minority still believes in its prospects. The venture capitalist Sacca, an early investor in Twitter, remains a shareholder and has blogged about his con viction that the company can thrive if it fine-tunes its product, perhaps by seg menting content into channels that could cater to different interests.
If that doesn't work, another strategy would be to sell the company. Sacca thinks Twitter would make a great acquisition for Google or Microsoft. If so, Twitter's next CEO may be its last.
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