Anthony Noto, the former Goldman Sachs Group Inc. (NYSE: GS) investment banker who joined Twitter Inc (NYSE: TWTR) after handling its IPO, is consolidating control at the top of the company. The executive joined Twitter as its chief financial officer, but, according to an article published by The Verge’s Natasha Tiku on Tuesday, he’s getting into marketing and more.
On Wednesday in a filing made with the Securities and Exchange Commission it was revealed that Mr. Noto purchased around 6,700 shares in the company in the last five days. Twitter shares have lost close t0 4% of their value since opening on Monday and have lost a great deal more since revealing earnings last week.
Noto takes control at Twitter
The buy in by Noto represents a sign of confidence in his own abilities at Twitter as the company fails to attract the ad spending necessary to keep investors on its side. Stifel analyst Scott W. Devitt upgraded his view on the company’s stock from Sell to Hold on Monday on rumors of management changes at Twitter as well as stories of Google pursuing an acquisition at the company.
According to Mr. Devitt should management change, “the stock may rise because the new management would get an extended leash to prove itself before the reality of the business set in again.”
Dick Costolo, the current CEO of Twitter is clearly under pressure to improve the company’s performance as investors remain unhappy with the firm’s monetization. If pressure from the board is strong enough to result in an internal debate about leadership Noto, who is taking more and more control, may be the ultimate victor.
Twitter shares slump
According to a source that spoke to Ms. Tiku at The Verge, Anthony Noto is “consolidating power.” As that article points out, the term mirrors an offhand joke made by the company’s current CEO when he took the job as COO at Twitter.
First full day as Twitter COO tomorrow. Task #1: undermine CEO, consolidate power.
— dick costolo (@dickc) September 13, 2009
There certainly are Machiavellian undertones to the rumors about Mr. Noto’s rise inside of Twitter, but that may be more in the prose than in reality. With his background at Goldman and Twitter’s twisted executive past, and internal coup fits easily into a narrative spun around the company.
Whether or not there is any truth to the presentation of Noto as Iago to Costolo’s Othello, is impossible to verify at this point, but it may give hope to investors in Twitter. As Jim Cramer said about the company after its extremely disappointing earnings, it’s difficult to see why it can’t make money given the clear potential.
Perhaps investors would prefer to see a Wall Street banker attempt to unlock that potential. At the very least, as Mr. Devitt of Stifel pointed out in his report, it may give investors some reprieve as the market allows new management time to get its house in order and develop a monetization strategy going forward.