Twitter, Inc .'s TWTR three-month long search for a CEO finally ends. The company announced that co-founder Jack Dorsey, who is currently serving as interim CEO, will be back at the helm for the second time. Investors cheered the announcement as shares closed 7% higher yesterday.
Twitter also named Adam Bain as the Chief Operating Officer while ex-CEO Dick Costolo stepped down from the board. Dorsey will also be quitting as the chairman of Twitter.
Dorsey said he was "excited and honoured by the trust that board has placed in him to continue to lead Twitter as CEO on permanent basis." He further added, "No one is more determined than I am to see this company achieve its promise."
Dorsey also said the company has been making "'significant strides towards the 3 priorities outlined at the Q2 earnings call: disciplined execution, simplifying the service and better communicating value."
Dorsey's name has been making the rounds ever since Twitter's board started looking for a full-time CEO after Dick Costolo stepped down on Jul 1. However, Twitter was reluctant to name Dorsey as he was unwilling to give up his CEO responsibilities at Square, a mobile payments company he founded in 2009. Twitter said it was interested in hiring only a full-time CEO.
By announcing Dorsey as CEO, Twitter did deviate from its strategy. Per Peter Currie, a Twitter board member, Dorsey's performance in the last three months as the interim CEO made the board choose him unanimously.
As the interim CEO, Dorsey has been very vocal about the future of Twitter. He himself has criticized some of the product changes and has admitted that Twitter needs to go mainstream. He has been trying to bring big and sustainable changes to the product, which in turn will appeal to the masses and expand its user base.
Twitter is launching a news curation feature called project Lighting. It is also launching a massive marketing campaign to help people understand the product. Moreover, Twitter is supposedly mulling the idea of increasing its signature 140 character limit, thus enabling people to post longer tweets.
Currently, Twitter has a user base of 316 million, not anywhere close to Facebook's over 1.5 billion user base. Even Instagram, photo sharing app, has surpassed the 400 million user mark
For awhile now, analysts have viewed Dorsey as the logical choice as "founders sometimes bring the internal legitimacy needed to alter a company's course, by virtue of having conceived it."
Dorsey will be pulling a Steve Jobs -- managing two companies at the same time. Jobs served as the CEO of Apple Inc. AAPL and animation studio Pixar until it was sold off to The Walt Disney Company DIS in 2006. Currently, Elon Musk manages Tesla Motors, Inc. TSLA and Space X.
Though Dorsey evaded questions as to how is he going to manage his time with Square and Twitter, he did mention that great support from his teams has enabled him to smoothly run work at both organizations in the last three months.
Dorsey along with Evan Williams, Noah Glass and Biz Stone founded the micro blogging site in 2006. Dorsey became the CEO in 2007 but was ousted the following year as his leadership was branded as subpar by fellow founder Williams. However, Dorsey remained on Twitter's board. In the subsequent years, Dorsey founded Square, mended his image and slowly moved up Twitter's corporate ranks.
Dorsey has a huge task in front of him. Twitter's inability to make profits, a sluggish user growth rate and the prolonged lack of clarity regarding a permanent CEO widely reflected on its stock price in the recent past.
Twitter's stock has lost 23% so far in the year and also suffered the ignominy of trading below its IPO price on some trading days this year.
It remains to be seen how Dorsey would execute his double duties as CEO of Twitter and Square when both the companies are at a crucial juncture. As Square gears up to go public it will need tremendous attention as well.
Twitter at present is a Zacks Rank #3 (Hold) stock.
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