Twitter makes money for first time ever, but problems remain

Twitter on Feb. 8, 2018 reported its first-ever quarterly profit, delivering a boost to shares of the social network which has been lagging for years against fast-growing rivals. (File Photo/AFP)
Updated 08 February 2018
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Twitter makes money for first time ever, but problems remain

NEW YORK: Twitter made money for the first time in its nearly 12-year history, a milestone that satisfied investors in the short term but might not resolve the company’s broader problems any time soon.
The company is still struggling to get people to sign up, despite the attention President Donald Trump’s no-holds barred tweets have drawn to the service. One problem: Anyone can read tweets without signing up. As a result, Twitter’s user base pales compared with Facebook and the Facebook-owned Instagram.
And that means fewer advertising opportunities.
Beyond that, Twitter has been dealing with policing hate speech and abusive comments, fake accounts and attempts by Russian agents to spread misinformation. Every time Twitter tries to respond to a problem, it’s either not good enough, or some other problem emerges.
“They are playing whack-a-mole with these problems,” said Michael Connor, whose Open Mic group helps investors push tech companies to address privacy, abuse and other issues. “They say they have the problem under control, but they don’t know what the problem is exactly.”
Add to that a revolving door of executives, including an influential chief operating officer leaving after Thursday’s earnings report.
Twitter said it had an average of 330 million monthly active users in the final three months of last year, unchanged from the previous quarter and below Wall Street’s estimate of 333 million. By contrast, Facebook has 2.2 billion and Instagram has more than 800 million.
Twitter hadn’t turned a profit until now because — competing with Facebook, Google and others for digital ad dollars — it didn’t attract enough advertising revenue to make up for its expenses. But it’s been cutting costs and focusing on new revenue streams, such as live video.
In some good news, the company grew revenue by 2 percent to $732 million in the final three months of 2017. That’s above the $687 million that analysts polled by FactSet were expecting. Its net income — a first — was $91 million, or 12 cents per share. Adjusted earnings were 19 cents, above analysts’ expectations of 14 cents.
After the results came out, the company’s stock jumped more than 17 percent in morning trading to $31.64, its highest level since 2015.
The quarter “was a breath of fresh air for investors that have patiently awaited for this turnaround story to manifest after years of pain,” said Daniel Ives, head of technology research at GBH Insights.
Nonetheless, Twitter has big challenges ahead. Connor said that while investors don’t want to micromanage Twitter, they at least want the company “to show that there is a level of management and governance on the senior level in place willing to address these issues.”
While Twitter is well-known, it remains difficult to use, making it difficult for the company to explain to people why they need it. Twitter also has an “image problem,” Wedbush analyst Michael Pachter said in a recent research note, “as it has been slow to act on harassment and other hostile behavior.”
The company has enacted a slew of new policies, and Pachter says this renewed focus should help. But enforcing them will be a bigger hurdle .
Connor’s group recently helped two large Twitter and Facebook shareholders file resolutions asking the companies to take more responsibility for fake news, abuse and hate speech. The companies have not formally responded, though Twitter has introduced a slew of new measures to weed out abusive account and has said that it “cares deeply” about misinformation and its harmful effect on civic discourse.
Then there’s the issue of automated accounts made to look like real people. In the days after a New York Times report on the “shadowy global marketplace” of brands and celebrities buying fake retweets and followers, prominent Twitter users collectively lost more than a million followers, suggesting that Twitter either didn’t know or didn’t act until the expose.
Fake accounts aren’t a new problem. Last June, Twitter said it has been “doubling down” on its efforts to weed out such accounts by “expanding our team and resources, and building new tools and processes.” It estimates that less than 5 percent of monthly active users are fake. But the Times referenced a report saying it could be as high as 15 percent.
One chief problem: more fake accounts keep popping up, and those behind them are getting smarter, so Twitter’s countermeasures haven’t made much of a dent.
Forrester Research analyst Erna Alfred Liousas said that while rival social networks such as Facebook deal with fake accounts, too, it may be “more elevated for Twitter” because there has been so much focus on its monthly user numbers. Anything that could jeopardize advertisers’ ability to see how many people they will reach, she said, “is going to cause concern.”
Another concern: last month Chief Operating Officer Anthony Noto announced his resignation from the company following Thursday’s earnings report. Noto, who was also finance chief until last July, has served an influential and important role at the company and had led its venture into live video. Twitter said it is not replacing Noto, and instead will split his duties between executives.
“Now (that) he’s gone, who’s running the company?” Pachter said.
Technically, that’s CEO Jack Dorsey. But Dorsey splits his time as head of payments company Square.
Twitter has “less than Jack’s undivided attention,” Pachter said, adding that nonetheless Dorsey runs the company with a “benevolent autocracy” that leaves little room for innovation.
By contrast, Pachter said Facebook CEO Mark Zuckerberg “is not afraid if they alter his baby, his invention, to make it better,” even if in the end Zuckerberg may be the final arbiter.
Twitter declined to comment. But Dorsey said at a conference late last year that it’s “not about the amount of time I spend at one thing but how I spend the time and what we’re focused on.”


Barack and Michelle’s next act: TV deal with Netflix

Updated 22 May 2018
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Barack and Michelle’s next act: TV deal with Netflix

  • The Obamas will have hands-on involvement in producing content and will appear personally in some of the shows while curating others
  • Under the name Higher Ground Productions, the Obamas have the option to produce scripted and unscripted series, documentaries and feature films

LOS ANGELES: Former US President Barack Obama and his wife, Michelle Obama, have struck a deal to produce films and series for Netflix Inc, the streaming service said on Monday, giving the former first couple a powerful and unprecedented platform to shape their post-White House legacy.
Under the name Higher Ground Productions, the Obamas have the option to produce scripted and unscripted series, documentaries and feature films, Netflix said in a statement.
The Obamas will have hands-on involvement in producing content and will appear personally in some of the shows while curating others, said a person familiar with the deal.
Terms of the multi-year deal were not disclosed and the first of the programming is not expected to reach viewers until about May 2019, the person said.
The agreement between the Obamas and Netflix, which boasts some 125 million subscribers worldwide, is a first for any occupant of the White House.
The closest comparison is former US Vice President Al Gore, whose global warming documentary “An Inconvenient Truth” won an Oscar in 2007. Gore also launched a youth-oriented cable TV network, Current TV, in 2005 but it was sold to Middle-East based Al Jazeera in 2013, which later shut it down.
The Obamas gave no details of the topics they planned to cover but the content is not expected to be directly political.
Barack Obama in a statement recalled the “fascinating people” from all walks of life that he had met during his eight years in office, ending in January 2017.
“We hope to cultivate and curate the talented, inspiring, creative voices who are able to promote greater empathy and understanding between peoples, and help them share their stories with the entire world,” he added.
Netflix chief content officer Ted Sarandos said in a statement that the Obamas are “uniquely positioned to discover and highlight stories of people who make a difference in their communities and strive to change the world for the better.”
The deal with the Obamas also marks one of the biggest coups for Netflix in drawing top-level talent away from traditional Hollywood studios and television networks.
In the past year, Netflix has cut deals with Shonda Rhimes, the woman behind hits like “Scandal” and “Grey’s Anatomy,” and Emmy-winning Ryan Murphy, who created “Glee” and directed the TV series “American Crime Story.”
Netflix, which has budgeted $8 billion for programming in 2018, is also producing Martin Scorsese’s next film starring Robert De Niro and Al Pacino.
Barack Obama was the first guest on David Letterman’s return to television in an extended talk show format with Netflix that debuted in January.