Twitter CEO Dick Costolo steps down

Co-founder Jack Dorsey will take over chief executive duties in the interim as the social network seeks a new leader

Dick Costolo

Dick Costolo

Embattled Twitter CEO Dick Costolo will leave the social networking company on July 1, a move that comes after months of intense pressure from disgruntled investors.

Twitter co-founder and Chairman Jack Dorsey will be taking over as interim CEO while the company looks for a new chief executive, the company announced Thursday. This doesn't appear to be a Steve Jobs-esque return to the company for Dorsey, who will remain CEO of Square, the payments company he co-founded in 2009. Costolo will remain on Twitter's board of directors.

The search for Costolo's replacement will be conducted by a committee formed by Twitter's board of directors. It will be helmed by Peter Currie, the former Netscape CFO and Twitter's lead independent director. Company co-founder Evan Williams and venture capitalist Peter Fenton will also serve as members of the committee. Internal and external candidates will be considered for Twitter's top job.

Twitter's financial performance has been a consistent source of frustration and disappointment for many investors who have been calling for Costolo's head for the better part of a year. The firm has yet to post a profit since its initial public offering in 2013. Furthermore, the company's revenue growth has slowed over the past few quarters, and its first quarter revenue came in below analyst expectations.

Sun Trust financial analyst Robert Peck said in December of last year that "there's a good chance he's not there in a year." He told CNBC at the time that Costolo's continued presence at the company was the top question he received about Twitter from institutional investors.

The company's lackluster user growth has been another source of frustration for investors. Twitter has embarked on a number of new initiatives to grow its user base, but those changes have yet to translate into massive gains in the number of people logged into and using the service.

So far, Wall Street has welcomed the news, sending shares of Twitter's stock up almost 8 percent in after hours trading.

In Twitter's press release, Costolo was quoted as saying he was "tremendously proud" of Twitter's staff and its accomplishments in his six years with the company. He said the company has "great leaders" and a "clear strategy," and expressed confidence in Dorsey's ability to lead Twitter during the transition.

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