Twitter Falls on Executive Exits as Turnaround Seen Delayedby
Company said to name two new board members this week
Twitter under pressure to make product improvements quickly
Twitter Inc. fell after the company lost four members of its executive leadership team, including its product and engineering chiefs, signaling any attempts to boost growth at the struggling social media company will be delayed.
The quartet of executives, including product head Kevin Weil and head of engineering Alex Roetter, chose to leave the company and take some time off, Chief Executive Officer Jack Dorsey said in a Twitter post. Twitter’s head of media, Katie Jacobs Stanton, and human resources vice president Brian “Skip” Schipper are also leaving the San Francisco-based company, Dorsey said.
The exodus comes as the company has failed to improve its site quickly enough to reverse a slowdown in user growth, according to people familiar with the matter. Weil had been interviewing for other jobs over the past few months, according to several other people with knowledge of his plans. Separately, Twitter will this week add two new board members to help guide it through its reorganization, according to a person familiar with the matter who asked not to be identified because the information was private.
“We don’t see how the departure of the heads of three major business divisions can be viewed as a positive in the middle of an attempted business turnaround,” Scott Devitt, an analyst at Stifel Nicolaus & Co. wrote in a note to clients. He downgraded his recommendation on the stock to hold.
Twitter declined 4.6 percent to $17.02 at the close in New York. The stock has lost about half of its value in the past 12 months and is the third-worst performer on the Russell 1000 Technology Index so far this year, after FireEye Inc. and Western Digital Corp.
The company has been looking to add directors since appointing former Google Inc. executive Omid Kordestani as executive chairman in October.
The exits will be the first significant departures from the technology company since co-founder Dorsey returned last year as CEO. His predecessor Dick Costolo oversaw a slew of high-profile departures, including C-level executives and heads of product and engineering. Weil, for example, was Twitter’s fifth head of product in six years. The company also plans to announce the hire of a chief marketing officer soon, one of the people familiar said.
Re/Code said Leslie Berland, American Express’s executive vice president of global advertising, marketing and digital partnerships, may be named the new chief marketing officer of Twitter.
The San Francisco-based company is scheduled to report quarterly earnings on Feb. 10.
“While the company and others will likely position these departures and potential new hire announcements as providing a fresh start, at best -- for investors -- they likely delay the timetable of any turnaround” said Mark May, an analyst at Citigroup Global Markets, in a note to clients. “They reflect abnormally high turnover at Twitter since inception and represent the loss of what management, the board and some partners just recently highlighted as important pieces to the company’s turnaround.”
Dorsey’s plan for getting Twitter out of a growth slump depends on enhancing the product, making it easier for people to use and less intimidating for newcomers to the social-media service known for its 140-character limit. The company has made several bold changes, including adding a Moments section to compile the best tweets about breaking news events on the site.
The departures of Roetter and Weil increase the burden on Dorsey, who is also CEO at Square Inc., an electronic payments company.
Chief Operating Officer Adam Bain will take over Twitter’s revenue-related product and media teams and run HR in the interim, Dorsey said. Chief Technology Officer Adam Messinger will take over all engineering and consumer product, design and research.
Weil, who has overseen Twitter’s product improvements since late 2014, has been in conversations with venture capital firms, including Kleiner Perkins Caufield & Byers, for a job for the last several months, though hasn’t secured a position, according to the people. Jason Toff, the head of the video-sharing application Vine, is also leaving the company and joining Google Inc. to work on virtual reality, he said in his own Twitter post.