Twitter Inc announced this morning that one out of every twelve staff on the books is right now could be given their marching orders in the weeks and months ahead. The move is part of a cost-cutting plan that new CEO Jack Dorsey hopes will make the firm more flexible and perhaps even profitable. The plan isn’t going over all that smoothly with Wall Street.
Twitter starts firing people
Twitter , in a statement published on Tuesday morning, said that “the Board of Directors of the Company approved a restructuring and reduction in force plan of up to 336 employees, constituting approximately 8% of the Company’s global workforce.”
Twitter is, as big name tech firms go, still very small in terms of worker numbers. That 336 number is about 8 percent of the firm’s total staff across the globe, as is made clear in the press release, but it seems less than significant to any used to layoffs by firms like Microsoft Corporation, Yahoo! Inc, or Hewlett Packard.
Just because it’s only a few workers doesn’t mean that the move is meaningless. For Twitter it’s likely a chance for Jack Dorsey to get rid of a lot of engineers, and a lot of projects, that he doesn’t feel fit his vision. It will also drop costs quite considerably.
Mr. Dorsey, in a letter to the 336 people he was firing and those who were sticking around, said that “The world needs a strong Twitter.” He used that line to defend the lay-offs, and said that it would focus the firm and give it a team more streamlined to fit a new roadmap.
Twitter hopes to bring new value
Twitter has been on a rough ride since the firm’s last CEO Dick Costolo dropped the job on July 1 2015. After the stock fell and fell on the back of lack of movement toward a new CEO and stalling growth figures, Jack Dorsey was confirmed. That did little to rouse the stock out of a malaise, however, though the reveal of a massive holding by Saudi Prince Alwaleed Bin Talal did manage to boost shares by a wide margin.
News of layoffs didn’t impress, however, and stock fell from an open above $30.50 on Monday morning to a closing price of $28.74. On Tuesday morning, after the firm has confirmed the plan to cut costs by laying off a lot of staff, it appears that Wall Street is a little more comfortable.
Twitter also revealed on Tuesday that it thought sales “and adjusted EBITDA for the third quarter of 2015 to be at or above the high end of the previously forecasted ranges of $545 million to $560 million and $110 million to $115 million, respectively.” That may be the major force driving shares upward in pre-market trading.
At time of writing shares in the social platform were selling for $29.50 in pre-market trading. That’s a jump of 2.74% above Monday’s closing price. It appears that the old maxim “buy the rumor, sell the news” works in negative when it comes to Twitter. The firm’s shares have had such a mixed time on the market in 2015 that it’s never clear what direction they’re going, even with the numbers coming through on a live feed.