Made some tough but necessary decisions that enable Twitter to move with greater focus and reinvest in our growth. http://t.co/BWd7EiGAF2— Jack (@jack) October 13, 2015
"New" Twitter CEO Jack Dorsey confirmed this morning what many whispered about last week: The long-struggling company will be laying off about 8% of its workforce in what Dorsey is characterizing as "A more focused Twitter."
According to an email sent to all staff this morning (and tweeted by Dorsey at 5:35 a.m. PT), the company will "part ways with up to 336 people from across the company" in an effort to "put our company on a stronger path to grow."
As of this week, Twitter had about 4200 employees. According to the Associated Press, "Twitter's workforce has nearly doubled over the past two years, weighing on efforts to turn a profit for the first time in its nine-year history."
"Since Dorsey and his partners started the service, Twitter has lost nearly $2 billion," the AP reports, and this year, "Twitter's expenses through the first half of the year climbed 44 percent to $1.2 billion. The company's revenue totaled $938 million during the same period."
As rumors of the layoffs heightened Monday, it closed trading down 6.81% to $28.75. However, trading was higher Tuesday, as the layoffs also allowed Twitter to revise their third-quarter results "to be at or above the high end of the company’s previous targets," the WSJ reports. You can read the revisions here, in a regulatory filing dated October 12.
Citigroup analyst Mark May told the Wall Street Journal that “While we can think of both positive and negative investor takeaways from this news, we believe it primarily is a reminder that much work and possible near-term disruption will be required to achieve the type of long-term improvements hoped for by management, the board, and by investors."
Another analyst is even less hopeful. According to Edison Investment Research analyst Richard Windsor, who spoke with the AP, "It is important to run a tight ship, but simply cutting jobs is often the action of a company that does not know what else to do."
In their regulatory filing Twitter says that they expect the layoffs to cost them between $10 million and $20 million, basically between $30,000 and $60,000 in severance costs per laid-off employee.
From: Jack Dorsey
To: All Employees
Date: October 13, 2015
Subject: A more focused Twitter
We are moving forward with a restructuring of our workforce so we can put our company on a stronger path to grow. Emails like this are usually riddled with corporate speak so I'm going to give it to you straight.
The team has been working around the clock to produce streamlined roadmap for Twitter, Vine, and Periscope and they are shaping up to be strong. The roadmap is focused on the experiences which will have the greatest impact. We launched the first of these experiences last week with Moments, a great beginning, and a bold peek into the future of how people will see what's going on in the world.
The roadmap is also a plan to change how we work, and what we need to do that work. Product and Engineering are going to make the most significant structural changes to reflect our plan ahead. We feel strongly that Engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce. And the rest of the organization will be streamlined in parallel.
So we have made an extremely tough decision: we plan to part ways with up to 336 people from across the company. We are doing this with the utmost respect for each and every person. Twitter will go to great lengths to take care of each individual by providing generous exit packages and help finding a new job.
Let's take this time to express our gratitude to all of those who are leaving us. We will honor them by doing our best to serve all the people that use Twitter. We do so with a more purpose-built team, which we'll continue to build strength into over time, as we are now enabled to reinvest in our most impactful priorities.
Thank you all for your trust and understanding here. This isn't easy. But it is right. The world needs a strong Twitter, and this is another step to get there. As always, please reach out to me directly with any ideas or questions.