Twitter mulls layoffs, expansion freeze

Jack Dorsey is tightening Twitter's belt

Just days after being named permanent chief executive of Twitter, Dorsey is planning a series of cost-cutting manoeuvres at the social networking company, including layoffs and halting a plan to expand the company’s San Francisco’s headquarters, according to three people familiar with the plans, who spoke on the condition of anonymity because the details are private.

The plans to cut back both space and staffing are part of an effort to trim what many insiders see as an organisation that has grown bloated — Twitter has more than 4,100 employees in more than 35 offices — over the past few years, these people said. A Twitter spokesman declined to comment. The moves, with the layoffs set to come as soon as on Tuesday, signal swift action by Dorsey, who was named permanent chief only on Monday.

Dorsey, 38, who also co-founded Twitter, had held the interim chief title since July 1 and has had time to assess the company’s prospects, strengths and weaknesses.

He returned to a company in crisis. While Twitter went public in 2013 in a wave of hype, its stock price has more recently fallen — at one point dropping below its $26 initial public offering price — as the company has struggled to attract new users. Twitter faces intense competition from Instagram, Snapchat and WhatsApp, threatening its ability to attract new advertising dollars.

Moving quickly once in the executive suite is a well-worn tactic by founder chief executives who return to their company after a stint away. This year, Mark Pincus, founder of Zynga, also came back as chief executive of the games company after a period out of the day-to-day operations. Soon thereafter, he cut the staff 18 per cent and exited several nonessential businesses.

At Twitter, many of the cost-cutting measures came into focus during a recent planning process for 2016, according to two people familiar with the company’s plans. Executives had just finished the discussion, these people said, and decided that trimming the fat from Twitter’s rapid expansion over the past two years would be necessary.

Twitter’s spending has been rising. In the last quarter for which Twitter reported financial results, costs and expenses totaled $633 million, up 37 per cent from a year earlier.

The layoffs will most likely affect multiple areas of the company, including the engineering and media teams.