Twitter results need to wow to reassure investors

When Twitter Inc. reports results on Wednesday, a less than stellar showing could hammer the stock further as a broad selloff in the technology sector has made investors jittery.

Twitter's shares have lost more than two-thirds of their value in the past 12 months.

Several tech stocks with lofty valuations have plunged in the past few days after dismal sales outlook from LinkedIn Corp and business-analytics company Tableau Software fueled growth fears for the entire sector.

"I think the problem is that in the current market any sign of a weak outlook will be quite harshly punished," Atlantic Equities analyst James Cordwell said.

Investors want to see Chief Executive Jack Dorsey's strategy to reignite growth in user numbers.

Twitter reported an 11 percent growth in active monthly users in the third quarter to 320 million, the slowest growth since the company went public in 2013.

But one effort, Moments, which showcases Twitter's best tweets and content, has failed to take off as expected, analysts have said.

Twitter is also planning to reorder tweets to prioritize those it believes more users will want to see, BuzzFeed reported on Friday.

Many users decried the reported plan, with the hashtag #RIPTwitter becoming the top trending U.S. item on Twitter on Saturday.

Twitter has been criticized for trying to become more like Facebook Inc, which has been growing at a much faster rate and reported 1.59 billion active monthly users in January.

"We expect only modest sequential user growth (for Twitter) in 2016, likely 1 percent per quarter," Wedbush Securities analysts wrote in a preview note on Friday.

Analysts expect Twitter to report earnings of 12 cents per share on revenue of $709.9 million, according to Thomson Reuters I/B/E/S.

JACK OF TWO TRADES

Another lingering concern has been Dorsey's dual role of running Twitter as well as mobile payments company Square Inc.

Dorsey, who became interim CEO in July and then CEO in October, has called for "bold rethinking" about the company but has not yet clarified what that means.

Dorsey has also moved to restructure the company by laying off more than 300 employees and making marquee hires, notably that of former Google executive Omid Kordestani as executive chairman.

But four senior executives have quit the company in the past few months, adding another concern about the company's ability to restart growth.

"We believe that had Moments been an early success, the executives would not have left so soon, voluntarily or otherwise," Wedbush analysts wrote.

As of Monday, Twitter shares were trading at 25.7 times forward earnings, shy of Facebook's 30.4.

"Why would you invest in something like a Twitter when Facebook is on a similar valuation with a stronger trajectory - that's the kind of questions investors are asking," Cordwell said.

source: www.abs-cbnnews.com

Former Microsoft CEO Ballmer discloses Twitter stake

NEW YORK, United States - Former Microsoft chief executive Steve Ballmer disclosed Friday that he has taken a four percent stake in Twitter, expressing confidence in the messaging platform's new management team.

Ballmer, who last year left the US software giant and then became owner of the Los Angeles Clippers NBA team, announced the stake in a tweet as he offered praise for newly returned Twitter CEO Jack Dorsey.

"Good job @twitter, @twittermoments innovation, @jack Ceo, leaner, more focused. Glad I bought 4% past few months," Ballmer said in his tweet.

The stake in Twitter by Ballmer, whose Microsoft investments make him among the world's wealthiest individuals with a fortune estimated by Forbes at $22.8 billion, would be worth some $800 million at current share prices.

Twitter shares have risen some 25 percent this month as Dorsey was named CEO on a permanent basis. Twitter also announced a reorganization that cut eight percent of its staff and introduced a new Moments features that offers real-time news.

Last week, Ballmer lauded Twitter and Dorsey shortly after the co-founder's appointment was announced.

"I think @twitter is remarkable," Ballmer said at the time. "There is amazing chance to innovate and grow. Excited to see progress with @jack as CEO Impressive dude!"

Ballmer becomes one of the largest stakeholders in Twitter, ahead of Dorsey's three percent but behind Saudi billionaire Al-Waleed bin Talal's five percent and co-founder Evan Williams' seven percent.

Dorsey's return comes as he also directs mobile payments startup Square, which filed for a stock offering this week.

One of the Twitter co-founders, Dorsey ran the company in 2007-2008 and served as interim chief executive after Dick Costolo resigned in June.

Ballmer took over as CEO of Microsoft in 2000 from co-founder Bill Gates, a classmate and friend from their days at Harvard University in the 1970s.

While Microsoft was one of the world's most valuable companies, it has slipped in recent years as rivals Google and Apple grabbed leadership of the tech sector.

In 2013, Ballmer said his biggest regret was missing the boat on smartphones.

source: www.abs-cbnnews.com

Twitter appoints Jack Dorsey CEO, seeks new chairman

Twitter Inc. named Jack Dorsey as its permanent CEO but said it would look elsewhere for a chairman, seeking to allay concerns about its co-founder's dual role as head of the mobile payments company Square.

Twitter's shares rose as much as 6 percent on Monday after the announcement, which ended months of speculation about who would take the top job at the microblogging service.

Dorsey has been running Twitter as interim CEO to much acclaim since his predecessor, Dick Costolo, stepped down on July 1.

"To further simplify the demands on his time as well as to make sure we bring a fresh voice and new leadership to the board, the board has decided to separate the chair and CEO roles," Peter Currie, Twitter's lead independent director, said on a call.

Twitter is working to rekindle growth after its latest quarterly results revealed the slowest rise in monthly average users since the company went public in 2013 - a performance that Dorsey at the time called "unacceptable."

Some investors had expressed concerns about whether Dorsey could run both Twitter and Square, which he also co-founded. Square is expected to go public this year and Dorsey may have to devote substantial time courting investors for the IPO.

But others say Dorsey, 38, is a more effective leader now than in 2008, when he was fired from his first stint as Twitter CEO.

Investors and analysts have lauded faster product rollouts since Dorsey took the helm in July, including a widely available "buy now" button that allows users to make purchases directly through Twitter.

Kevin Landis, portfolio manager at the Firsthand Technology Value fund, said Dorsey should focus on innovation and on finding ways to make Twitter as much as part of its user's daily lives as Facebook is to its users.

"The worst thing you can say about Twitter today is that it looks a lot like the Twitter of two years ago," said Landis, whose fund has owned shares of Twitter since before the company went public.

IN GOOD COMPANY

Dorsey is not the first person to run two major companies. Steve Jobs led Apple Inc (AAPL.O) and animated movie studio Pixar for several years. Elon Musk runs electric car pioneer Tesla Motors Inc (TSLA.O) and rocket maker SpaceX.

Dorsey sent Twitter's first tweet - "just setting up my twttr" - in March 2006. He had more than 3 million followers as of Monday, more than either Musk or the current Apple CEO, Tim Cook.

Shebly Seyrafi, analyst at FBN Securities, said Twitter might be seeking to limit Dorsey's already heavy workload. But that is only part of the rationale, he said: an outsider as chairman is also a way to keep "a check" on the chief executive.

It might also offer protection against any potential conflict of interest. Among other recent innovations driven by Dorsey is a partnership with Square that lets users make political donations through Twitter.

"You could potentially see conflicts of interest with Square," said James Cakmak, analyst at Monness, Crespi, Hardt & Co. "It hasn't happened yet, but at that time it would help him recuse himself from conversations that do involve Square."

Initially, Dorsey appeared to have been excluded from running Twitter after the company said its CEO job would be full-time.

"We assumed we would only consider a candidate who could make an undivided commitment to be our CEO," Currie said. "But over time it became apparent to us that Jack was not just meeting but surpassing the expectations we had of him as interim CEO, while also running Square."

Tech news website Re/code first reported Dorsey's permanent appointment last week. Dorsey will remain on Twitter's board. Costolo resigned from the board on Sept. 30.

Adam Bain, previously Twitter's president and head of revenue and once considered a favorite for the top job, was named chief operating officer.

Twitter's shares rose 5.8 percent to $27.84 on the New York Stock Exchange.

source: www.abs-cbnnews.com