How is Twitter doing financially? Cutting 9 percent of workforce
Published 7:01 am Thursday, October 27, 2016
Twitter beat analysts’ earnings expectations Thursday before the stock market opening bell, adding that it plans to terminate 9 percent of its global workforce as part of a restructuring, according to CNBC.
The social media giant posted third-quarter adjusted earnings of 13 cents per share on revenue of $616 million.
Twitter, according to CNBC, said the “restructuring is focused on reorganizing the company’s sales, partnerships and marketing efforts, in order to help Twitter achieve GAAP profitability in 2017. It posted a third-quarter GAAP net loss of $103 million, or 15 cents per share.”
Meanwhile, Twitter has been a hot topic in recent months as a sale consideration. But sale or no sale, Twitter users are bound to see changes as the beleaguered communications service tries to broaden its appeal to more people and advertisers.
A new owner could clean up Twitter and curb some of the nastiness that’s become synonymous with it. Or perhaps a new owner would just show more ads. Or let it languish while it mines the best of what Twitter now has into its existing products and services.
All of this is speculation, of course, and there might not even be a new owner. Twitter’s stock has plunged after rumored bidders are, well, rumored to be no longer interested. The company is scheduled to report its third-quarter earnings on Thursday, and analysts are expecting lukewarm results along with a dismissal of takeover rumors. Layoffs are also likely.
A new parent — whether that’s Google (huh?), Salesforce (who?) or Disney (hmm…) — could inject fresh life into a 10-year-old company that’s never turned a profit and remains confounding to many people. Of course, none of these potential suitors have acknowledged interest in Twitter, let alone their plans for it. Even if Twitter stays independent, drastic changes to its service might just be what Twitter needs to be competitive with Facebook, Instagram and Snapchat.
How might it change?
TWITTER BECOMES MORE LIKE ITS NEW OWNER, IF THERE IS ONE
Facebook’s absorption of Instagram and WhatsApp in recent years could offer clues. Both services have kept separate identities, to an extent, and have experienced user growth. But slowly, they are acquiring Facebook-like features. For example, Instagram no longer presents feeds chronologically; they are now sorted much like Facebook’s news feed, using some secret formula known only to Facebook.
Though the change has turned off some early Instagram users, its user base has soared, to 500 million as of June. That’s nearly 200 million more than Twitter, even though Instagram is three years younger. As Instagram gets more users and a mainstream appeal, its content has diluted somewhat. But many of the street photographers, graffiti artists and tween mini-celebrities who made Instagram what it is are still there — maybe just harder to find.
STAYS THE SAME BUT WITH MORE ADS
Twitter has never turned a profit, and whoever buys it will need to fix this. That means boosting the user base, so advertisers would follow. That also could mean better targeting, so that ad rates go up.
Google, anyone? The search giant is the leader in online ads. Imagine what its might and muscle could do to Twitter’s ad business. YouTube hardly had any ads when Google bought it; now, ads are so prevalent that YouTube is able to charge $10 a month for an ad-free version called Red.
Instagram has also inserted ads into users’ feeds of perfectly composed snapshots featuring everything from cappuccino foam to seafoam. It started out slowly with a carefully curated ad here and there, but today you’re not likely to avoid ads when opening the app.
A TOOL FOR BRANDS, NOT REVOLUTION
Jonathan Cowperthwait, a Twitter user since 2008, said he’d be worried if Google bought Twitter because the online search giant “is the worst” at social services that aim to foster online interactions, beyond email. Its Google Plus service never took off; Orkut and Dodgeball closed. Cowperthwait said that rather than let Twitter live independently, Google might “try to shoehorn it back into their own social product.”
Salesforce, a company that provides internet services to businesses, has also been mentioned as a contender, leading to a lot of head-scratching among users. Would Twitter become a business product, used for customer service and marketing instead of revolutions, neo-Nazi memes and political outbursts?
“Salesforce is a very technology-driven company,” eMarketer analyst Debra Aho Williamson said. “It seems they would want (Twitter) mostly for the data that Twitter has.”
THE LITTLE BIRD FALLS OUT OF THE NEST
Remember MySpace? It was — the — social network before Facebook came along. News Corp., the stodgy media conglomerate, bought it for $580 million in 2005. But users started falling off as MySpace failed to keep up with Facebook’s speedy innovations. After layoffs and failed relaunches, News Corp. sold the fallen giant for $35 million in 2011, and that was just about the end of it.
It’s not unthinkable that Twitter could suffer the same fate under a big media company.
Walt Disney’s reputation as a squeaky-clean, family-friendly company is perhaps the clearest antithesis to Twitter’s soul, as many users see it — even though Disney is much bigger than Mickey Mouse and owns ABC, Marvel and the “Star Wars” franchise, among other properties.
“My chief fear is that Disney will wield Twitter as one large PR machine to prop up their image and squash dissent,” said Timothy Hayes, an Ohio State University student who says he fell in love with Twitter in high school. “The Mouse is not above silencing (its) opponents.”
Some users, on the other hand, might welcome some thorough housecleaning that goes beyond the steps Twitter is currently taking to curb abuse and nasty behavior on its service. One Twitter user, New York attorney Danny Mann, says that while Google has improved YouTube “in ways that were unimaginable at the time,” he finds many of his fellow YouTube users difficult to deal with. In this sense, it’s possible that even with Google’s weight behind it, the abusive and nasty nature of many Twitter comments would remain as is.
The Associated Press contributed to this report.