Twitter Inc COO’s Exit No Surprise; Shares Up

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Twitter Inc COO’s Exit No Surprise; Shares Up
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Twitter Inc (NYSE:TWTR)’s recent management reshuffling was covered in a report by SunTrust analyst Robert Peck, who says the recent exit of Chief Operations Officer (COO) Ali Rowghani “does not come as a surprise.” The micro-blogging site filed an 8-K disclosing Rowghani’s resignation effective Thursday. Twitter shares gained 3.5% yesterday to close at $36.79.

An expected move from Twitter

Robert Peck said that the move is not really unusual as recently Twitter Inc (NYSE:TWTR) has recently reshuffled its Product and Engineering segment. He added that Daniel Graf, a foirmer Google Maps executive, was hired as a product head, whereas Twitter VP Alexander Roetter replaced Chris Fry as the head of the engineering division.

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In his report, the analyst also maintained that product innovation at the company is not at pace expected by the management or investors. Peck is positive on the reshuffling of the management and is neutral on the financial outlook of the company.

Real reason for the resignation

Twitter Inc (NYSE:TWTR) in its filing mentioned that Rowghani would remain an employee of the company and will continue to be a strategic advisor to CEO. “Twitter does not intend to hire a replacement for the COO role, and all of Mr. Rowghani’s operating responsibilities will be assumed by other members of the Twitter management team.”

A report from CNBC stated that Rowghani had to resign as the differences between him and chief executive officer Dick Costolo escalated over the COO role. The reports of disagreement surfaced back in April, when the company hired Google’s Daniel Graph and new head of engineering in May. Though the appointments were vital for the company, these new hires reported directly to Costolo, skipping Rowghani. The news website stated that the management was also disturbed by Rowghani selling $9.5 million worth of his Twitter shares right after the lockup expired, but the real reason seemed to be the conflict between Rowghani and Costolo.

Twitter Inc (NYSE:TWTR) is showing the door to a number of executives in its bid to restructure the organization. In the first half of the year alone, some of the big names from the posts such as head of product, head of engineering and now its chief operating officer resigned, and each time Twitter stated that these employees will now perform in an advisory role.

Analysts as well as industry observers are raising concerns over slow user growth for Twitter, and whether the new execs will be able to forge a turnaround remains to be seen.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@wordpress-785388-2679526.cloudwaysapps.com
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