Twitter boss hires new CFO
IOL - Jul 3rd 2014, 10:48
San Francisco - Twitter’s Dick Costolo is gutting the company’s top ranks as he seeks to build an executive dream team.
The microblogging service yesterday appointed a new chief financial officer, former Goldman Sachs banker Anthony Noto, who took the company public in November.
It’s the fourth major change among chief executive Costolo’s top lieutenants this year, after the exits of Twitter’s chief operating officer, head of engineering and vice president of consumer products.
Costolo, 50, is making the moves as he faces pressure to improve Twitter’s growth after a slowdown in new users has caused the stock to tumble 34 percent this year.
The changes leave Costolo with more power over the product road map and with a new ally to reach out to Wall Street, yet they don’t solve the company’s underlying problems, said Robert Peck, an analyst with SunTrust Robinson Humphrey Inc.
“He’s shaking it up now so that over the next six months he can hopefully show traction,” Peck said.
“If Dick doesn’t fix this problem, there could be questions about whether he can continue to be chief executive.”
The turnover at the top of Twitter is akin to the churn at other Web companies that went public and then saw their stocks beaten down in the past few years.
Zynga and Groupon shares plummeted after their 2011 initial public offerings, leading to executive exits and ultimately costing then-Groupon chief executive Andrew Mason his job, while Zynga founder Mark Pincus stepped aside as chief executive last year.
By contrast, while Facebook’s shares dropped by more than half in the months following its May 2012 IPO, chief executive Mark Zuckerberg mostly held onto his top lieutenants during the stock’s decline, losing only his chief technology officer.
“Companies when they become public may have some rough sailing and things don’t turn out as planned,” said David Larcker, a professor at Stanford University’s Graduate School of Business.
“They’re taking fairly drastic actions and betting that that will resolve what their problems are.”
Jim Prosser, a spokesman at Twitter, declined to make executives available for comment yesterday.
For Costolo, the changes are designed to surround him with handpicked deputies to help stem two straight quarters of slowing user growth, said a person familiar with the matter.
Twitter’s board, which includes co-founders Jack Dorsey and Evan Williams, has raised questions about member growth and user engagement.
Costolo has been concerned about building a stronger culture at Twitter and has been asking others for advice, one person familiar with the matter has said.
In April, Costolo hired Google maps executive Daniel Graf as vice president of consumer products, followed by the May appointment of a new engineering chief, Alexander Roetter, who was already at the company.
Last month, COO Ali Rowghani resigned after a power struggle with Costolo over responsibilities, people with knowledge of the matter have said, and the role is going unfilled.
Twitter’s membership in the first quarter rose 25 percent from a year earlier to 255 million, decelerating from 30 percent growth in the prior period and 39 percent in the third quarter of 2013.
The decline has dragged the stock down 43 percent from a post-IPO record on December 26.
Twitter gained 2.6 percent to $42.05 at the close in New York yesterday.
Noto, 46, left his position at Goldman Sachs in May to join hedge-fund firm Coatue Management, yet never started the job there, according to people familiar with the matter.
A representative from Coatue declined to comment.
Noto began at Twitter yesterday, sealing a deal for a $250,000 salary and a one-time stock award of 1.5 million restricted shares vesting over four years, worth about $64 million at current prices.
The new CFO, who lives in New York, hasn’t decided whether to move his family to San Francisco, where Twitter is headquartered, said one of the people.
Noto has support from and good relationships with some of Twitter’s largest investors, including Rizvi Traverse Management, which owns almost 15 percent of the company, according to a person familiar with the matter.
Mike Gupta, who was CFO, is staying at Twitter to be head of strategic investments, the company said.
Noto spoke about the CFO’s role at the TechCrunch conference in New York in May 2013, saying the job requires “somebody you trust, that can truly be your partner, someone that can tell you you’re wrong.”
“The only way people can really be excellent is with truth, so you have to have a CFO who will have the intellectual capacity and conviction to tell you you’re wrong, and try to support that with data,” Noto said at the conference.From © Copyright 1999 - 2014 Independent Online, a division of Independent Newspapers (Pty) Limited
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