Twitter announces 8 percent lay off of its workforce in a bid to revive growth

TwitterTwitter laid off up to 336 employees across the company on Tuesday, as the social network plans to revive growth and streamline its operations.

The layoffs announced could equate to about 8 percent of Twitter’s workforce of 4,100 people. The cutbacks, mainly in the company’s engineering and product functions, come a week after co-founder Jack Dorsey took over as permanent CEO.

This is Dorsey’s first major business move since taking over as the permanent chief executive on October 5. The company hopes that Dorsey would be able to rectify problems that have decelerated user growth at the messaging service and aggravated an uninterrupted cycle of financial losses.

Lowering costs can enhance profits but at Twitter, it has increased uncertainty about the future, the company’s pursuit of faster growth and its ability to lure a larger audience.

In a letter to Twitter employees, Dorsey said that a more streamlined company will result in more products rolling out at a faster pace. He emphasized that engineering will move much faster with a smaller and nimbler team.

Twitter’s manpower has nearly doubled over the past two years, hampering efforts to turn a profit for the first time in its nine-year history. Since Dorsey and his partners began the service, Twitter has lost nearly $2 billion.

Twitter disclosed its revenue by estimating that it will hit or slightly exceed its previous target of $545 million to $560 million. The official results are expected on Oct. 27. The stock gained 99 cents, or 3.5 percent, to $29.74 in midday trading Tuesday.

Dorsey admitted that Twitter is too confusing for a lot of people to use, turning off new users at a time when other social media services such as Snapchat and Facebook’s WhatsApp have gained immense popularity.

As part of its turnaround plan, Twitter launched a new feature called Moments last week that packages commentary, video and images about major events that have captured people’s attention. The work on Moments started while Dorsey’s predecessor, Dick Costolo, was still Twitter’s CEO.

Twitter’s expenses through the first half of the year surged 44 percent to $1.2 billion. The company’s revenue totaled $938 million during the same period.

The streamlining of operations will cost Twitter $10 million to $20 million, primarily to pay for employee severance packages. The accounting charge for the restructuring is expected to be lower, ranging from $5 million to $15 million, according to a filing with the US Securities and Exchange Commission.

Avatar
Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

FCC rejects petition to stay Ligado Network’s 5G rollout

FCC rejects petition to stay Ligado Network’s 5G rollout

The Federal Communications Commission rejected by a vote of 3-2 on Tuesday to freeze the rollout of Ligado Networks’ nationwide mobile bro...
16 hours ago
Oil prices rise on hopes of big stimulus money

Oil prices rise on hopes of big stimulus money

The crude oil prices showed an upswing with Brentwood going up to $56.08 a barrel and the US West Texas Intermediate crude oil selling at $5...
16 hours ago
Kia bags Apple Car production deal

Kia bags Apple Car production deal

Apple Inc.’s much-coveted Apple Car could be produced by Kia Corp. at the latter’s manufacturing facility in the United States. The Sout...
16 hours ago
Food Stocks to Lookout for in 2021

Food Stocks to Lookout for in 2021

The COVID-19 pandemic has seen a resurgence in recent weeks and talks of normalcy are still far away, even with the vaccinations. For invest...
2 days ago
Big Three Credit Agencies: Who are they?

Big Three Credit Agencies: Who are they?

Credit rating agencies are risk assessment firms that provide ratings on the creditworthiness of bonds and other debt instruments. Investor...
2 days ago
Pat Gelsinger takes over Intel, expected to focus on manufacturing and execution

Pat Gelsinger takes over Intel, expected to focus on manufacturing and execution

Pat Gelsinger, the ex-chief technology officer of Intel, will be taking over the reins at the chip-making tech company Intel on February 15 ...
2 days ago