Twitter seeks new CEO, and more users, as Costolo exits

Fri Jun 12, 2015 2:26pm EDT
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By Lehar Maan

(Reuters) - Some things can't be summed up in 140 characters.

Twitter Inc's announcement that Dick Costolo would exit as CEO on July 1 was long on plaudits but offered few clues on how the company will tackle its biggest problem: user growth.

Twitter' shares were down 0.6 percent in early afternoon trading on Friday, after rising much as 3.9 percent just after the opening, as investors assessed the company's prospects.

Analysts said Twitter has an uncertain future unless it can reverse slowing user growth by introducing new features that will help it win a bigger chunk of the digital advertising market from rivals such as Facebook Inc.

Some also wondered whether Twitter, with its 300 million users, could be takeover target.

"Prospective buyers have been interested in purchasing Twitter in the past, and during the interim (CEO) search period we believe the opportunity for acquisition is heightened," Jefferies analysts wrote in a client note.

Twitter's current market value is about $23.5 billion, suggesting a bid would have to be pitched at around $30 billion.

Google Inc is often mooted as the most likely suitor. However, SunTrust Robinson Humphrey analyst Robert Peck said a deal was unlikely in the near term as that would have been an attractive alternative to a CEO change.   Continued...

The Twitter logo is shown at its corporate headquarters  in San Francisco, California April 28, 2015. REUTERS/Robert Galbraith