Chief Executive Officer Dick Costolo of Twitter, Inc. (NASDAQ/TWTR) abruptly announced he was stepping down on Thursday, June 11 amid growing frustration with the Internet application’s slow user growth and sluggish advertising revenues.
Jack Dorsey, Co-Founder and Chairman of the Board at Twitter, will serve as Interim CEO while the board searches for a permanent replacement. Costolo, however, will remain on Twitter’s board of directors. (Source: Twitter, June 11, 2015.)
Following the announcement on Thursday, Twitter’s share price surged eight percent in after-hours trading. However, by Friday morning, the stock had given up most of those gains, up only 1.4% to $36.33 per share in early trading.
Twitter “Unfollows” Dick Costolo
Costolo says that he had been contemplating his leave for some time now.
“I initiated conversations with some members of the board at the end of last year about CEO succession as I contemplated what was next for me,” he told investors in the conference call on Thursday, “Ultimately following discussions with the full board and at February meeting and then at our meeting last week, we agree that now is the right time to begin this transition.”
Dorsey specifically mentions that Costolo’s leave is nothing more than his own decision: “One thing I do want to make clear is that this transition is not the result of anything more than Dick deciding to move on from his role as CEO.”
Investors, who have been disappointed with the company’s recent financial performance, cheered on the announcement. According to its earnings report for the quarter ended March 31, 2015, revenue came in at $436 million, below the $456 million expected by Wall Street analysts. The company’s deficits also continued, losing $162 million, or $0.25 per share, for the quarter.
Twitter’s outlook looks gloomy, too. In its quarterly report, the company told investors to expect revenue of $2.17 billion to $2.27 billion, significantly lower than the $2.38 billion expected by analysts.
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Whether the change will lead to actual improvement in the company’s performance remains to be seen. Investors are now eager to see who will be named the new CEO to carry out their vision for the company.