Twitter tops Wall Street earnings expectations, will cut jobs

Twitter Inc said Thursday it would cut nineper cent of its global workforce to keep costs down as the microblogging service reported quarterly results that beat Wall Street expectations, lifting shares.

It is also killing off Vine, a mobile video app where people share short video clips that play in a loop. While beloved by users and a pioneer in its own right, Vine, which launched in 2013, never took off with the masses and has lost its lustre as of late.

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Twitter's third-quarter revenue growth slowed sharply but topped analysts' expectations. Its stock rose 2.6 per cent to $17.74USin early trading. Up to Wednesday's close, the stock had lost a quarter of its value this year.

Revenue rose about eightper cent to $616 million, above the average analyst estimate of $605.8 million US. The company reported a 20 per cent rise in revenue in the previous quarter and 58 per cent last year.

Total advertising revenue of $545 million grew six per cent year-over-year, and 90 per cent of it came from mobile.

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Excluding items, the company earned 13 cents per share, beating the average estimate of ninecents, according to Thomson Reuters I/B/E/S.

Focus on live video

The company is "more disciplined about how we invest in the business" and intends to be profitable in 2017, said chief financial officer Anthony Noto.

Among its priorities, Twitter is dedicated to growing its burgeoning live video offerings through partnerships with organizations such as the National Football League, Noto said. Advertisers are increasingly interested in live video because of its potential to reach new and younger audiences, he added.

Twitter, which has seen user growth stall amid competition from nimbler rivals such as Instagram and Snapchat, said its user base ticked up three per cent to 317 million average monthly active users in the quarter.

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Analysts on average had expected 316.3 million monthly active users, according to market research firm FactSet StreetAccount.

Twitter hired bankers last month to field acquisition offers, but it has seen a dearth of potential bidders after Salesforce.com Inc, the last of the companies believed to be interested in buying the company, said it was not interested in a purchase.

The apparent lack of interest forced the social media company to consider a route anathema to aspiring tech startups: a major restructuring.

Twitter had 3,860 employees globally as of June. The reduction of more than 300, chiefly in its sales, partnerships, and marketing efforts, could hurt the company's image in San Francisco, where competition for engineering talent is fierce.

The cuts come about a year after a similar wave of layoffs of up 336 employees were announced when Jack Dorsey, its co-founder who had been serving as interim chief executive, took over as permanent CEO. Since then, Dorsey has drawn criticism from some analysts for splitting his time between Twitter and Square.

The company said it expected cash expenditures of about $10 million to $20 million in the fourth quarter, mostly for severance costs.

On an investors' call Thursday, Dorsey said he would not comment on speculation about a potential sale. He said in a statement that the company has "a clear plan, and we're making the necessary changes to ensure Twitter is positioned for long-term growth."

Asked by investors whether major events such as presidential debates or the Olympics affected Twitter's quarterly growth in metrics, Noto said there needed to be such an event "every day" on the platform to meaningfully improve numbers, and "that's where we're headed."

The popular but money-losing microblogging service spent aggressively on product development and marketing in recent years, betting it could afford losses as long as it attracted new users. But that growth stalled this year after it exceeded 300 million active monthly users, less than a fifth of Facebook Inc's users and below Facebook's Instagram.

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The company's net loss narrowed to $102.9 million, or 15 cents per share, in the third quarter ended Sept. 30, from $131.7 million, or 20 cents per share, a year earlier.

Twitter also said it would roll out "meaningful updates" next month affecting how it protects users from abusive content, an issue for which the company has endured growing criticism.