Twitter cuts engineering team, lays off one in 12 employees

Twitter will work better with a "nimbler" engineering team, Dorsey tells staff

Twitter is getting smaller
Credit: Martyn Williams

Twitter will lay off up to one in 12 employees as it streamlines its product roadmap, new CEO Jack Dorsey told his workforce on Tuesday morning.

The company will in future focus "on the experiences which will have the greatest impact," he wrote in a letter to staff.

In Dorsey's tweet announcing the news, he said that he had made "some tough but necessary decisions that enable Twitter to move with greater focus and reinvest in our growth."

Although Dorsey was only confirmed in his role as CEO last week, he has been filling in since Dick Costolo stepped down on July 1, and so has had ample time to influence the company's strategy.

In his letter, he touted the new Moments feature as "a bold peek into the future of how people will see what's going on in the world" -- although initial reaction to Moments suggests it may not be bold enough.

Both Vine and Periscope will survive the cull, Dorsey said.

But up to 336 employees, or around 8 percent of the workforce, won't.

"We feel strongly that Engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce," Dorsey wrote. The rest of the company will be streamlined in parallel, he said.

Rumors of the layoffs surfaced last week. Reaction then was mixed, with some welcoming a move to align revenue and expenditure, and others suggesting it would tactless for Dorsey to begin by announcing layoffs.

In a filing with the U.S. Securities and Exchange Commission, Twitter said it will spend between US$10 million and $20 million on severance benefits, but it will claw back about $5 million worth of unvested stock options.

Twitter now expects revenue for the third quarter to meet or exceed its most optimistic forecast of $560 million, with earnings before interest, taxation, depreciation and amortisation (EBITDA) similarly at or above the $115 million previously forecast, it said in the same filing.