Twitter numbers paint grim profitability picture
Twitter numbers paint grim profitability picture:- "We believe that only a radical overhaul of the (user interface) and value proposition could potentially grow its user base, but such a step would carry enormous risk in alienating core users," Mahaney said.
Twitter's share price was battered, closing down 12.3 percent at $16.41.
The company's revenue shortfall came even though its cost of revenue – the amount it must spend for hosting the service and sharing revenue with partners, among other things – rose by 40.4 percent to $306 million from a year earlier.
Meanwhile, revenue per user was $2.25, a 3.4 percent drop from a year earlier and far behind the $7.16 in revenue per user that Facebook Inc (FB.O) reported in the fourth quarter. With virtually no user growth, Twitter is spending more to generate less revenue per customer. The service has 319 million average monthly active users, compared to Facebook's 1.86 billion.
Twitter said it would reevaluate some kinds of advertisements that have not done well, such as so-called "direct response ads" where the goal is for consumers to respond right away.
That leaves the company chasing brand advertisers, but that could be a challenge, too, because those companies – from carmakers to soda sellers – plan six to 12 months in advance and have options, eMarketer analyst Debra Aho Williamson said.
"Figuring out brand advertising is something that Twitter needs to do," she said, "but it's going to take a lot of time to convince advertisers."
Source:- http://www.reuters.com/article/us-twitter-results-metrics-idUSKBN15O2ZB
