Twitter stays quiet on rumored layoff announcement

- There are numerous reports that San Francisco-based social media site Twitter will lay off a large but undisclosed number of software engineers as early as Tuesday.

KTVU spent some time outside Twitter headquarters where the little blue bird has been sharpening its talons for reasons not entirely clear, because no one is talking about it.

The founder and just re-appointed Twitter permanent CEO Jack Dorsey appears to be wasting no time in downsizing the social website. Once a wild and free runaway start-up, Twitter is facing the reality of a cold, hard demanding stock market. It's stock down almost 20 percent this year alone.

"Twitter is not growing at the rate that Wall Street expected when it became public," said recently retired Dean of Golden Gate University's Business School Terry Connelly.

"The fact is that Twitter is not a profitable company.  Twitter is not getting the kind of leverage that I think it wants. It's isn't growing as fast as it wants and it's gonna have to cut back expenses," said longtime high-tech analyst Larry Magid.

Though Twitter reported revenue of $1.4 billion last year, it still lost $539 million. In the last quarter, it lost another $137 million.

"They're spending their money like the boom days. This last quarter they report their spending was up 37 percent. And that's just not a reality, with the markets starting to show some jitters," says Steve Farnsworth, a marketing and social media expert who founded the Steveology Group.

Six years ago, Twitter had 22 employees. Today it has 4,100, many of them software engineers.

"These companies have to constantly reinvent themselves. They have to figure out how to attract new people to come on board; how to keep young people excited.  It's not easy," says Mr. Magid. So, Twitter has been buying other companies. "It really shows that they can't do a lot of innovation inside and it's easier to tap other people's ideas who are out there testing in the field.," says Mr. Farnsworth.

All of those KTVU interviewed agree that Twitter is an important company, but unless it gets its house in order, that might not last on its own.

"Twitter might well be attractive to a large company, but probably with a smaller payroll. And that may be one of the possible outcomes of this rumored lay off process," said Connelly.

But others think Twitter is really too big to take over.

"Twitter is actually making the right move.  I think it's actually gonna survive because of this in the cutting in spending," said Farnsworth.

Amazingly, even if the social media companies to lose money, if the numbers of users continues to grow or revenues continue to grow, Wall Street will not pressure them. But Twitter has been a disappointment.

The company has yet to confirm or deny the layoff rumors.   

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