Twitter announces 8% workforce cuts in that autumn email nobody wants
Tue 13 Oct 2015
Twitter, in a bid to streamline operations globally, has announced that it will cut up to 8% of its workforce, primarily in the engineering and product departments.
The reasoning behind this move, declared in an email from CEO Jack Dorsey to all employees this morning, is to create an Engineering department that would move faster and be more responsive with a ‘smaller and nimbler team.’
This is a major move for the company after the appointment of co-founder Jack Dorsey as Twitter’s new CEO last week. Third-quarter results will be posted on October 27, and although (per the Form 8-K filed with the SEC yesterday) the company expects to be on target to its forecast of $545-$560 million in earnings, there are some negative economic factors which may have contributed to this decision.
The most recent quarterly report, from July 2015, showed the slowest growth in users since Twitter went public in 2013, at just 2 million new users. In addition, as of close of business Monday, the value of Twitter’s company shares had fallen about 20% in 2015, from a high of $53 in April to $28 yesterday.
While the company expects to incur significant short-term costs associated with the layoff, including $10-$20 million in cash expenditures (primarily severance payments to employees), the hope is that the layoff, combined with an overall plan to reprioritize and drive efficiency throughout the company, will make a more ‘purpose-built’ team that will build strength specifically in the Twitter, Vine and Periscope product markets. Just this month, the company also rolled out new functionality in the Twitter app, with ‘Moments’, a curated list of the ‘best of Twitter’ available throughout the day.
Dorsey’s email pledges to conduct the layoff with the ‘utmost respect’ for the people affected, and to provide ‘generous exit packages’ and placement assistance as well. Even at the low end of the stated severance cost, $10 million dollars would provide an average severance package of almost $30,000 per the approximately 336 employees affected by the restructuring.