Twitter cuts 9 percent of staff, seeks profit in 2017

FILE - In this July 27, 2016 file photo, the Twitter symbol appears above a trading post on the floor of the New York Stock Exchange. Twitters stock is soaring following a report that it may be moving closer to selling the business, Friday, Sept. 23. Twitters CEO Jack Dorsey has struggled to come up with a strategy to attract people to the messaging service, while Facebook and Snapchat race ahead in the battle for peoples attention and allegiance.(AP Photo/Richard Drew) less FILE - In this July 27, 2016 file photo, the Twitter symbol appears above a trading post on the floor of the New York Stock Exchange. Twitters stock is soaring following a report that it may be moving closer ... more Photo: Richard Drew, Associated Press Photo: Richard Drew, Associated Press Image 1 of / 25 Caption Close Twitter cuts 9 percent of staff, seeks profit in 2017 1 / 25 Back to Gallery

Twitter for the past month has been the object of speculation that it would be sold, and then the subject of criticism when it wasn’t. The company was too big to attract a quality offer, critics said, and too bloated to turn a profit.

On Thursday Twitter responded by announcing it was firing 9 percent of its workforce, or about 330 people, largely from its sales and marketing teams, and shutting down its ultrashort-video app, Vine.

The layoffs were announced to employees in an email ahead of the social media company’s 4 a.m. call with investors. Chief executive Jack Dorsey was also expected to address the layoffs at a company-wide meeting later in the day.

The elimination of Vine, which at one point last year attracted 200 million viewers a month, was not included in Twitter’s quarterly report. The short-video app has stalled in popularity since its debut in 2013. It will be shut down “in the coming months,” according to a company blog post.

Twitter’s goal in all of this is simple: become profitable by 2017.

It was an aspiration Dorsey repeated several times in Thursday’s investor call.

Should Twitter become profitable, it may finally attract a buyer or could continue as an independent company, experts said.

“It does have a very powerful niche, and it’s a distinct player in that niche,” said Anindya Ghose, a professor of information technology and marketing at New York University’s Stern School of Business. “Live (video) is a potential game changer that actually put Twitter ahead of the curve. ... TV is finally everywhere, and this plays into that larger ecosystem and gives them some good numbers to bank on.”

Trimming staff and narrowing its focus on its core social media service and new live-broadcast TV apps, rather than quick-hit Vine videos, show where Twitter thinks it can be successful: in the live-event space, broadcasting longer shows, politics, sports and business events.

Vine’s stalled growth showed it was unable to go toe-to-toe with Snap Inc.’s Snapchat and Facebook’s Instagram in the short-video-app space.

With the prospect of selling the company off the table — something Twitter executives declined to address outright during the call — the microblogging site needed to convince its investors that it is on the right track.

And, for the moment, it may have done so.

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Twitter beat Wall Street expectations in its third quarter, bringing in $616 million in revenue and 317 million users a month, up 4 million from last quarter.

The company’s stock climbed more than 4 percent in early-morning trading to $18.12, but closed Thursday just slightly up at $17.29. The stock has not traded above $26, the price at which it went public in 2013, since last year.

Analysts had predicted Twitter would make no more than $610 million in revenue and expected only modest gains in the company’s user base.

“We’re being disciplined in how we invest in the business,” Dorsey said, adding he believed in the 2017 profit goal.

The company reported a net loss of $103 million, or about 15 cents a share.

Layoff rumors had been swirling around the social media company before Dorsey confirmed the cuts.

“As part of the restructuring, we will move from three sales channels to two,” Twitter announced in its quarterly letter to shareholders. The company did not specify what percentage of the cuts would come from its San Francisco headquarters.

In its call, Twitter embraced the idea that the company’s shift toward live broadcasts of sports and political events was already paying off in growing revenue and bringing in more users, particularly those who may have not otherwise considered checking out the social network. For many, watching a game alongside topical commentary may seem less demanding than composing a 140-character tweet or figuring out which accounts to follow.

But executives bristled at the suggestion that big events this year — including the 2016 Olympics and presidential election — had driven heightened engagement that the company may not be able to sustain in slow news cycles.

“We’re focused on creating the most useful, open and comprehensive news network on the planet,” Dorsey said. “The people are showing us that these changes are working.”

Hoping to demonstrate its appeal to non-users, Twitter recently released a slate of new TV apps for Apple TV, Amazon Fire TV and Microsoft’s Xbox One that would bring live events and simultaneous conversation from the social network into people’s living rooms.

Among the promised programming are 10 Thursday night NFL games that Twitter paid $10 million for the right to stream. The TV apps also carry video of other sporting events and political and business news.

The first presidential debate between Donald Trump and Hillary Clinton garnered the most daily activity Twitter has ever seen.

“Twitter remains the place to go for live broadcast, but management appears unfocused and complacent, while the narrative has shifted to buyout rumors,” wrote Wedbush analyst Michael Pachter in a note to investors ahead of Thursday’s call. “Until Twitter is focused on attracting new users, driving increased use by its existing users, and demonstrating its value proposition to people who don’t use the service, we expect it to grow very slowly. Its service is too complicated and difficult to use for the average Internet user despite multiple changes.”

But Dorsey said the TV apps and live video broadcasts were bringing in new users at faster rates, and demonstrating Twitter’s strength: promoting conversation about events in real time.

Dorsey did not spend much time addressing the layoffs in the call.

Last year, he had led the company in a similar belt-tightening just days after he was reinstated as the company’s chief executive. Those cuts, of 336 people, came largely from the company’s engineering and product functions.

“Made tough but necessary decisions that enable Twitter to move with greater focus and reinvest in our growth,” Dorsey said at the time.

But company bloat may have remained an issue during sales negotiations earlier this month, experts said.

As of June 30, Twitter had about 3,860 employees.

Analyst Bob Peck, of SunTrust Robinson Humphrey Inc., projected that significant layoffs, like the cuts announced Thursday, could save Twitter $50 million to $100 million per year.

Earlier this month, several companies seemed ready to make an offer on the floundering social network. But it didn’t take long for Salesforce, Disney and Google to back away from a possible acquisition.

“It’s unlikely anyone would step in and buy Twitter when the fundamentals are deteriorating,” Neil Doshi, a senior Internet analyst with Mizuho Securities USA Inc., said at the time.

Marissa Lang is a San Francisco Chronicle staff writer. Email: mlang@sfchronicle.com

Twitter: @marissa_jae