By Peter Ward October 16, 2015
Twitter Cuts 8% of Workforce
Twitter bird. ©Andreas Eldh
Twitter announced on Tuesday it will cut its global workforce by up to 8%, as new CEO Jack Dorsey attempts to place the social media company on a “stronger path to growth.”
Dorsey confirmed the layoffs, which will affect up to 336 people, in a memo sent to employees and a tweet sent out on Tuesday.
Most of the cuts will be made in the company’s engineering team, according to the memo. “Product and engineering are going to make the most significant structural changes to reflect our plan ahead,” Dorsey wrote. “We feel strongly that engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce. And the rest of the organization will be streamlined in parallel.”
Twitter has disappointed Wall Street with its slow user growth in recent months. The site attracts around 300 million active users per month, compared to Facebook’s nearly 1.5 billion users. Twitter has also been surpassed by Instagram, which recently announced it has 400 million users.
Twitter did offer some good news for investors—raising the forecast for its third quarter revenue and adjusted earnings. The company has had more success with its revenues than its user growth. Twitter reported revenues of $28.3 million in 2010, and is expected to surpass $2 billion in revenue this year. However, the social media firm is still not profitable.
Fantasy Sports Under Scrutiny
Gambling. ©Bev Wagar
The FBI and the U.S. Justice Department are investigating whether the business models of fantasy sports companies such as DraftKings and FanDuel violate federal law, The Wall Street Journal reported on Wednesday.
Fantasy sports sites have been the subject of much legal debate for the past few years. The sites allow users to pay entry fees to draft virtual sports teams, which are then pitted against one another based on athletes’ performances for real cash prizes. The main point of contention is whether these competitions are games of skill or luck, i.e. gambling.
In 2006, U.S. Congress banned financial companies from transferring money to online gambling sites, resulting in several being shut down. But while gambling sites were deemed luck-based, fantasy sports sites were made exempt as they were considered games of skill.
The most recent investigation into daily fantasy sports competitions focuses on allegations concerning the use of insider information. DraftKings and FanDuel, two of the biggest fantasy sports sites, have admitted that their employees have played and won significant amounts of money on each other’s sites. The companies have since barred their employees from competing on rival sites.
Daily fantasy sports websites have attracted hundreds of millions of dollars in venture capital from companies such as Alphabet, Comcast, 21st Century Fox and sports leagues.
FanDuel and DraftKings deny wrongdoing. “It is entirely predictable that the government would follow up on the misleading reports about our industry,” a DraftKings spokeswoman said in a statement. “We have no knowledge of the specifics of any federal investigation but strongly disagree with any notion that our company has engaged in any illegal activities.”
Goldman Sachs Suffers Profit Miss
Lloyd Blankfein, Goldman Sachs CEO ©Fortune Live Media
Goldman Sachs reported a profit on Thursday that missed analyst estimates for the first time in four years.
The New York-based bank attributed the disappointing results to global economic growth problems. “We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,” CEO Lloyd Blankfein said in a statement.
Net income for the third quarter fell 36% to $1.43 billion, from $2.24 billion a year earlier. Adjusted earnings were $2.64 a share, well short of the average estimate of $3, compiled by Bloomberg. The company’s net revenue also fell to $6.86 billion—dipping below $7 billion for the first time in two years.
The bank’s revenue from fixed-income, currency and commodity trading fell 33% to $1.46 billion in the third quarter.
Goldman shares fell 1.5% in early morning trading on Thursday in response to the earnings report. As of Wednesday, shares in the bank had fallen 7.5% so far this year.
Square Files for IPO
Square, the mobile payments company, announced on Wednesday details of its planned IPO. It’s been a busy few days for Square’s CEO, Jack Dorsey, who as of last week is also the CEO of Twitter and, as mentioned above, fired up to 336 people at Twitter this week.
Jack Dorsey, Square and Twitter CEO ©JD Lasica
“Jack Dorsey has had a hell of a week,” read the headline of a piece by Davey Alba in Wired. She notes that the IPO filing included the following note: “Jack Dorsey, our co-founder, President, and Chief Executive Officer, also serves as Chief Executive Officer of Twitter. This may at times adversely affect his ability to devote time, attention, and effort to Square.”
Square is now close to launching its roadshow, where it will try to sell stock to investors. One of the major questions investors will ask is whether Dorsey can juggle his dual roles at two large technology companies.
But that won’t be the end of the questioning. Square’s IPO comes at a difficult time for public listings. Data from Renaissance Capital shows the number of IPOs this year has dropped 36% from 2014, and listings this year have declined 3.5% on average from their offering price.
The company’s IPO filing revealed its finances, which fail to impress. Revenue for 2014 rose to $850 million—a 54% increase from a year earlier—but losses grew to $154 million in 2014. And in the first six months of this year the company lost $77 million, on revenue of $561 million.
The Ungoverned Parts of the World
Afghan refugees in Quetta, Pakistan, near the border with Afghanistan. ©United Nations Photo
Bloomberg published a fascinating data visualization of the areas of the world that are ungoverned on Tuesday. The piece, called The Ungoverned World, used a 3D globe and interactive features to show which countries encompass territories that have been seized by separatists, warlords, terror groups and drug cartels.
The most high profile of these currently is Syria, where rebels and the Islamic state have taken control of huge territories, and the violence has led to millions fleeing the country.
The article shows the number of internally displaced persons, refugees and deaths in each of the disputed regions, and a brief write up of the history of the conflict in each area.
Away from Syria, the Afghanistan-Pakistan border still has large regions controlled by the Taliban, some parts of Mexico are effectively under the control of drug cartels, Boko Haram causes chaos in parts of Nigeria, while Al-Shabaab and pirates are fighting with the government in Somalia.
There are many more countries with areas out of the control of their governments. The article not only gives a detailed view of the human toll in each of these cases, but also shows the sheer scale of conflict around the world in 2015.
