After Killing Twitter Stock Gain, Dorsey Wins Praise

29 Jul 2015 | Author: | No comments yet »

After Killing Twitter Stock Gain, Dorsey Wins Praise.

With the stock up on Twitter Inc.’s second-quarter revenue exceeding expectations, the interim chief executive officer didn’t self-congratulate or dwell on past successes but talked bluntly about Twitter’s shortcomings. SAN FRANCISCO: Critics have long lamented that Twitter Inc is difficult to use and has had trouble defining itself, which is why it has not expanded its audience.In the time since Twitter went public in November 2013, growth has stagnated while rival social applications, including WhatsApp and Facebook Messenger, drew hundreds of millions more people.San Francisco, United States – Twitter shares hit the slide on Tuesday as executives warned that the messaging service’s path to mainstream popularity would be a long one.The famous Twitter timeline, in which tweets from everyone you follow are displayed in reverse chronological order, is no longer getting the job done, Dorsey said on an earnings call with investors Tuesday evening.

KIM Kardashian may have used it to almost break the internet with a few saucy pics, but Twitter struggles to make a single buck of profit, the US social media giant has revealed. Photo: Reuters San Francisco: Twitter Inc. executives had a clear message for investors on Tuesday: We have a lot of work to do, and don’t expect great progress anytime soon. The San Francisco-based social media phenomenon, with its 316 million active users every month, posted a loss of $136.7 million, or 21 cents per share, in the April-June period. On a live-stream via the Twitter-owned Periscope app, Dorsey began by expressing frustration with the company he co-founded, saying product announcements “have not yet had meaningful impact on growing our audience,” which he called “unacceptable.” He also said Twitter hasn’t “done a great job at aligning the entire company” around its strategy. Twitter on Tuesday reported that it lost $137 million in the recently ended quarter on revenue that jumped 61 percent to more than half a billion dollars.

As a result, Twitter’s growth has been “unacceptable,” said Dorsey, who could be seen wearing a grey hoodie and a generous beard as he live-streamed the earnings call on Periscope. It’s really easy for people to post witticisms at 140 characters or fewer and share cool internet links, but its terribly hard to make money out of them. What’s needed, Dorsey said, is a broader overhaul of the Twitter product to make it more accessible to the majority of Internet users who don’t regularly log in.

While revenue increased about 60 per cent to $US502.4 million ($A685m) for the period until the end of June, it still wasn’t enough to cover its expenses in running one of the biggest online platforms ever to have existed. If he stays in the top job at Square, he could soon regularly be speaking to Wall Street: The mobile-payments company, which he also co-founded, has filed a confidential registration to go public, sources familiar with the matter have said.

But its shares dropped sharply after the 5pm start of a conference call with analysts, where Dorsey and Noto continually criticised the company’s disorganised product execution and inability to provide new users reasons to sign up for the site. In a closely watched figure, Twitter said that the number of people using the one-to-many messaging service monthly climbed 15 percent to 316 million compared to the same three-month period a year earlier. He called for a “questioning of our fundamentals,” including the reverse-chronological timeline, in order to “balance recency with relevance.” For those who don’t speak social media, that’s code for “we need to get more like Facebook.” Whereas Twitter’s timeline ranks tweets by recency, Facebook’s News Feed ranks posts by relevance, as determined by complex algorithms that adapt to each user’s behavior and preferences. Twitter is desperately pushing to get consumers to use more lucrative “direct response ads” which enable people to download apps or go elsewhere on the net.

They also said new product initiatives, such as instant timelines and improving the experience for those without Twitter accounts who visit the site, have not yet helped grow the audience. As Dorsey works to update Twitter’s offerings to attract a broader range of users, its sales team has been making deals—such as one with Google Inc.—to help advertisers use the site more effectively. Twitter has been experimenting with similar software, which it now uses to show you a series of older tweets when you log in, under the heading “While You Were Away.” Expect to see more of that in the future, as Dorsey sang the feature’s praises multiple times on Tuesday’s call. “I’m definitely seeing a lot more value at the top of my stream,” he said. The beleaguered company, which is also searching for a permanent chief, faces concerns as to whether it can ever become a mass-market service such as Facebook or Google. Another forthcoming feature, code-named “Project Lightning,” will employ human editors to collect top tweets about trending news topics and live events as they unfold.

On average, Twitter had 316 million monthly active users in the second quarter, up 15 per cent year-over-year but up less than 3 per cent from the first quarter of this year. Users of the main application rose by just 2 million from the prior quarter—a gain of less than 1%. “Investors demand a re-acceleration of user growth,” said Paul Sweeney, an analyst at Bloomberg Intelligence. “We did not see that this quarter to any notable degree.” The stock dropped as low as $31.90 in late trading. Twitter forecast that revenue in the current quarter would range from $545 million to $560 million, and that it would wind up taking in $2.2 billion to $2.27 billion in revenue for the full year.

For his part, Dorsey said afterward in an interview that he enjoyed his debut. “I relish any opportunity to tell our story,” he said. “I think we are communicating where we are presently, that we understand our challenges ahead.” One of his recent television appearances, on CNBC in June after the announcement of his return to Twitter, got one-star reviews — and not only because he sported a full mountain-man beard, which even his mother disapproved of, with a post on Twitter. Twitter did not offer criticisms that have not been heard before, analysts said, but Dorsey and Noto’s acknowledgement of the problems may mean they are more aggressively seeking solutions. “They made those remarks … with full disclosure in mind,” said Ken Sena, Evercore ISI analyst. “They were giving investors a sense of the challenge.” – Reuters From a business perspective, the Dorsey-led earnings call amounted to a blast of #realtalk from a company that under Costolo was at pains to reassure investors it was on the right path. Former Twitter CEO Dick Costolo was replaced this month on an interim basis by co-founder Dorsey, who also runs Square Inc., a mobile-payments company.

Dorsey, in addition to stepping in at Twitter, leads Square, a growing mobile payments company that is rumored to be planning an initial public offering. In the interview, he dodged questions about whether he wants to head Twitter or stick around at Square, saying, “I’m going to do what I think is best for both companies.” Costolo had sought to shift investors’ expectations for the company, arguing that Twitter could reach more people than Facebook even without persuading them to log in regularly. As I’ve explained, Costolo saw Twitter’s future as that of a media platform rather than a social network, with syndicated tweets gaining wide audiences beyond Twitter itself. Noto said Twitter changed its tone on the call because growth slowed so meaningfully, the company wanted to explain how it’s working to address the deceleration. “In the past we may not have had the growth that investors wanted us to have, but it was still quite strong.

And this quarter we barely had any growth.” The company is working to introduce a marketing campaign to explain the value of using Twitter to the masses, Noto said. Asked whether he is a candidate to take on the top post at Twitter on a permanent basis, Dorsey said he had “no update to provide.” But he sounded like a man gunning for the job. One current plan, internally named Project Lightning, is meant to create channels for whatever is happening live, including videos running simultaneously with what’s showing on television. Todd Jackson, who helped Twitter debut its Highlights product, is leaving for Dropbox Inc., while Christian Oestlien, who helped drive growth, is going to Google’s YouTube.

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