Square and Twitter Need to Dump CEO Dorsey

By Douglas A. McIntyre Updated Jan 13, 9:45AM EST · Published May 7, 9:10AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Square and Twitter Need to Dump CEO Dorsey — © Thinkstock

Jack Dorsey is chief executive officer of both Twitter Inc. (NYSE: TWTR) and Square Inc. (NYSE: SQ). His primary job has been to turn around the two floundering companies. Some investors believe he should hold only one of the jobs. He has done so poorly that he should hold neither.

Square creates tools to help businesses sell products and services and to help small businesses get financing. It announced horrible earnings, which dropped its stock price 22% to $10.22, against a 52-week range of $15.91 to $8.06. Square’s shares have fallen 31% this year.

In Square’s most recent quarter, revenue rose to $379 million from $251 million in the same period a year ago, but the company lost $96 million. A large portion of the shares owned by insiders will be available for sale when the post-IPO lockup period ends. Some of these insiders will sell, particularly if they are pessimistic about Square’s prospects. The theory behind the drop in share price also includes slowing revenue and the question of whether its business model will ever allow it to be profitable.

Twitter’s problems are more severe. Its user base has stopped growing, and it has not been able to tap online markets and increase its sales. Its average monthly users rose only 3% to 310 million in the first quarter, compared to the same quarter last year. Revenue rose from $425 million a year ago to $596 million, but Twitter lost $78 million in the quarter. Its outlook for the current quarter was ugly.
[recirclink id=329972]
The belief about Dorsey has been that his talent and deep knowledge of Twitter and Square made him the ideal candidate to save both companies. The evidence is strongly otherwise. The young public corporations need to hire seasoned CEOs if they hope to salvage ravaged prospects. If those prospects can be salvaged at all.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.