Twitter keeps adding features to prove it is not completely dysfunctional

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TWITTER chief executive officer Dick Costolo and his lieutenants stood in front of a roomful of Wall Street analysts in November as they rattled off a list of promises designed to prove they’re capable of broadening the site’s appeal to nonusers.

The crowd that endured the seven-hour presentation had little reason to expect changes soon.

Twitter had just switched to its fifth product chief in as many years, and the introduction of new features had stagnated amid the turbulence.

When Costolo next addresses Wall Street for the company’s earnings report on Thursday, he’ll be able to say that he did what he promised. Twitter, instead of defending itself in the face of constant rumours about its fate, is using a show-not-tell approach to drum up investor confidence, and bring out overdue updates to the social network, many of which had been held up for years amid internal bickering.

Twitter delivered on its plan to introduce a “what you missed” feature aimed at users who aren’t checking their feeds obsessively throughout the day.

It also finally started to test ways to make money when people see tweets outside Twitter’s own apps and website. It’s reached an agreement for tweets to appear in Google search results, people with knowledge of the matter said Wednesday. Twitter added ways for users to chat in groups and to capture and edit video. “We set an aggressive goal, and we hit it,” says Jinen Kamdar, product manager for direct messages and video.

Twitter’s recent stock movements have largely been driven by things outside Costolo’s control. Rumours about Google buying the company, activist investor Carl Icahn maybe getting involved, and Costolo possibly losing his job have all fueled swings in the company’s share price. None have come true.

Through all this, Twitter has kept quiet. Jim Prosser, a spokesman for Twitter, declined to comment.

During the company’s earnings presentation, Costolo will have to lean on the product launches to prove to investors that his team can do what he says it’s going to do.

He probably won’t have numbers to prove that the changes will result in more advertising revenue, says Jeff Sica, chief investment officer at Sica Wealth Management.

Analysts estimate that Twitter will report revenue of US$454 million and net income of US$41.1 million, according to data compiled by Bloomberg. Twitter still needs to demonstrate that it can combat a slowdown in new user growth.

“They’ve executed on just about everything they’ve promised, and this is very, very positive,” Sica says. “My concern is that investors might not be patient enough to wait for the products to evolve.”

Investors have reason to be skeptical. After being told last year that they should measure Twitter’s progress in terms of monthly user numbers, they were later informed—after those numbers didn’t climb as fast as expected—that the metric didn’t give the full picture. Monthly active users rose 23 per cent, to 284 million, in the third quarter, down from 24 per cent growth in the prior quarter.

In November, Twitter highlighted how 500 million people also come to the site each month to check out profiles or tweets without logging in, and 125 million people go to the home page and don’t sign up. Twitter’s stock price declined 44 percent last year.

On January 29, Jack Dorsey, a founder and board member, went on Twitter to defend Costolo and his product team in a series of posts. Dorsey described the group, now led by Kevin Weil, as “excellent in every way.”

Peter Currie, another Twitter director, also backed Costolo in a tweet.

With each product release, Twitter gets closer to resembling the vision that Costolo has outlined, where the social network becomes a place to find coverage of events as they happen, according to Robert Baird, an analyst with BTIG.

But the company is still playing catch-up, and the recent streak may not make up for years of stumbles, he says.

“The real question is, what took so long to get to the video product?” he said.

“They’re adding enhanced functionality, but the core problem of how you make Twitter simpler and easier to use for the mass market is still unclear.” — Bloomberg