Twitter shares soar
February 6, 2015
Twitter shares soared nearly 10 percent in after-hours trading as the popular social media service continued to fly high in the fourth quarter, boosted by better-than-expected earnings and revenue.
The San Francisco-based microblogging site reported that its earnings had nearly doubled in the final three months of 2014, with revenue hitting $497 million (418 million euros), up 97 percent from the same period a year ago. Adjusted per-share earnings were up 12 cents, a 10-cent year-on-year jump.
The company also said its quarterly loss had shrunk to $125 million, down from $511 a year earlier.
"We closed out the year with out business advancing at a great pace," said CEO Dick Costolo.
Twitter choked on bug?
The strong economic figures offset disappointing user growth as the service attracted just four million new users in the final quarter. Twitter said it had 288 million monthly users at the end of 2014, up 20 percent from one year ago.
Trying to calm investors, Costolo blamed the weak growth on a glitch in Apple's new iOS 8 system, saying the company had lost four million monthly users as a result. About 8 in 10 Twitter users connect to the service using mobile devices.
"There was an unforeseen bug in iOS 8," Costolo said. "Once we understood the issue we moved as fast as we could to minimize the impact."
However, analysts worry Twitter's challenges are bigger than a bug, saying the service is rapidly falling behind the competition.
"Twitter's biggest challenge is to prove it can win and retain new users. Just 18 months ago Twitter was clearly the #2 consumer social network, but now it appears to have tumbled into fourth place," said Forrester Research analyst Nate Elliott.
Google boost
Still, markets appear to be optimistic that the company could regain momentum in 2015 after Costolo confirmed a deal with Google on Thursday, aimed at increasing its visibility outside its own platform by making its tweets more searchable online. The news sent Twitter shares climbing nearly four percent in premarket trading.
Deutsche Bank analyst Ross Sandler said the tie-up "could be the catalyst to push shares meaningfully higher," and help Twitter add users.
However, the Twitter CEO warned that it could take some time before they will benefit from the new cooperation.
"This is not something that you are going to see launched or rolled out for several months," Costolo said. "I just want to make that very clear."
Earlier this week, Twitter unveiled plans to allow advertisers to place "promoted tweets" on third party sites, in what analysts believe could be the start of a broader advertising network. The social media platform is also hoping to attract more users by , including location-based interaction and in-app video capture.
pad/hg (AP, AFP, Reuters)