Twitter’s co-founder and new CEO, Jack Dorsey, had on Tuesday announced that about 336 employees would have to go – representing about 8% of the company’s workforce, due to the need to restructure, cut costs, and to grow.
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“We are moving forward with a restructuring of our work force so we can put our company on a stronger path to grow,” Mr. Dorsey wrote in an email to employees. “We feel strongly that Engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our work force. And the rest of the organization will be streamlined in parallel.”
To this end, the micro social media is adjusting its profits for the third quarter for revenue to $115 million even though earlier forecasts had been $560 million.
This is one of the major moves made by Dorsey since he has been named as the new CEO last week. The impending layoff became largely known on Friday after the market had closed, or it might have affected its stocks.
But on Monday, Twitter’s shares still dropped by about 7% and closed at $28.75; but on Tuesday’s premarket trading, the stocks rose a little over 2%.
As of June 30, the company had about 4,100 employees – largely grown through acquisitions and hiring; but this number represents an increase of 800 staff members or 24% growth from June last year. But then Twitter has been struggling to increase its user base; it has 316 million active users in the second quarter which represents 15% increase compared to last year’s figure.
Meanwhile, the company has promised a generous exit package to those staffs to be affected by the job cut; and the social media looks forward to taking a pretax charge of between $5 million to $15 million in the fourth quarter because of the employee layoff.
“We’ve been reviewing and pushing hard on our road maps, making sure that we’re doing fewer things,” Dorsey said last week when his appointment as CEO was announced. “There’s a huge desire for more efficiency, and there’s a huge opportunity to really raise the bar on our execution.”
But he has not ruled out the fact that “We’re going to make sure that we put extra emphasis on continuing to recruit great people to this company.”
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