Value Walk – More Voices Call For Ouster Of CEO Costolo

From Value Walk, December 29, 2014

Twitter CEO Dick Costolo for long has been questioned over his leadership abilities by many of the critics, and the latest to join the list is Bill George, a professor at Harvard Business School. They all are of the opinion that Costolo should resign from the position of CEO, and make space for someone worthy.

Twitter needs a new team

On Friday, George said on CNBC that the company needs a new team at the top and therefore Costolo should resign. George made Costolo’s comparison with the other biggies like Mark Zuckerberg, the CEO of social networking giant Facebook Inc (NASDAQ:FB) and with Larry Page CEO of Google Inc (NASDAQ:GOOG). Harvard professor said that Costolo is not at par with these names, and hence should step down allowing a better person to acquire the position. However, he did expressed his liking for the micro-blogging site, and said that he visits the site five times a day on a regular basis.

In an interview that lasted for few minutes, eight distinct complaints were put forward by the former CEO of Medtronic, George. The CEO of the medical device technology company said that with the losses that the company is making, it was not possible for the Street to stay with them for long. After the statement, he tweeted, “Time for new leadership @twitter; otherwise TWTR loses out to Facebook and Google.”

Time running for Costolo

Besides George, there are few others as well, who feel the need for Costolo to exit. Last week, Robert Peck, an analyst at SunTrust predicted that Costolo would exit the company in less than a year’s time. The news spread like fire, and the impact was clearly visible on the stock price, which was on the decline since the start of the year. This year the stock had registered a decline of 41%, but the news sent it up by 3.6%.

For the third-quarter, Twitter posted a revenue of $361 million up 114% on YoY basis. The same growth could not be seen in the number of active users while rival Instagram is stealing all the limelight. Facebook has more than 1.35 billion monthly active users while Twitter has no more than 284 million.

Twitter will report its next quarterly results on Feb. 5, and if the company fails again to meet the subscriber growth estimates, then the voices calling for the exit of Costolo will only get louder.