Cramer's Charitable Trust: Dorsey's First Major Move Is to Cut 336 Twitter Jobs

 | Oct 13, 2015 | 2:47 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


The following commentary was originally sent to Action Alerts PLUS subscribers on Oct. 13, 2015, at 2:16 p.m. ET.

In Jack Dorsey's first major move as CEO, Twitter (TWTR) announced it is cutting 8% of its workforce -- 336 employees -- in an attempt to create a leaner, more focused company. An email from Dorsey indicated that most of the layoffs are coming from the product and engineering side, as the company feels that both would move faster with smaller and nimbler teams, while still remaining the biggest percentage of Twitter's workforce. Management plans to invest the resulting savings in its most important priorities to drive growth. (Twitter is part of TheStreet's Action Alerts PLUS portfolio.)

This morning, Twitter filed an 8-k in connection with the restructuring plan, in which it announced it expects revenue and adjusted EBITDA to be at or above the high end of previous guidance for $545 million to $560 million and $110 million to $115 million, respectively. There was no commentary around monthly active user (MAU) trends in the quarter (the most important metric for investors); we will have to wait for the company's third-quarter results, which will be reported Oct. 27 after the close.

Given speculation around layoffs in the press over the past week, we think it is good for the company to essentially rip the bandage off and move forward. It is increasingly clear to us that, with Dorsey at the helm, there is a new sense of urgency within Twitter (certainly a pleasant surprise!). We find it encouraging that the company is willing to run on a lean business model and concentrate on fewer but bigger bets that have the potential to markedly improve both the top and bottom lines.

As we have said in the past, the company is going to need to show growth in users and engagement for sustainable long-term success; in the meantime, we are encouraged by the prospect of bigger and bolder innovation at the company. We are still awaiting clarification on how the restructuring will ultimately improve the Twitter product and, more important, we are looking forward to better understanding the roles and responsibilities of Dorsey, new COO Adam Bain and CFO Anthony Noto going forward.

Columnist Conversations

Foot Locker's (FL) less than expected quarterly earnings set off a round of selling the entire athletic appare...
View Chart »  View in New Window » Gold has met the first upside target off the last setup zon...
View Chart »  View in New Window »
View Chart »  View in New Window »



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.