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Over 100 Days, Twitter (TWTR) CEO Search is 'Too Long', SunTrust's Peck Says

September 21, 2015 7:18 AM EDT
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SunTrust Robinson Humphrey analyst Robert Peck highlighted today that the Twitter, Inc. (NYSE: TWTR) CEO search has now passed 100 days and is "too long."

"Several weeks back, we thought the CEO search was finally coming to an end and that a decision was imminent – we were wrong," Peck commented. "Conversations we had with industry participants indicated that Jack Dorsey was the most logical choice, particularly with no “superior” external candidate surfacing. We are stunned that we have now passed over 100 days since the announcement of the former CEO’s resignation, particularly since the board had discussions with him about stepping down since Dec. 2014. Feedback we hear from investors is that the process has taken too long."

Investors are looking toward the board as the reason for the protracted process.

Peck said some investors believe the board needs to come to terms with having a CEO who is also CEO of another company. Peck said, "We think this is less of an issue for several reasons: 1) Mr. Dorsey is seen as a leader and is well respected inside and outside of Twitter; 2) He has been running the company since July and we’ve already seen his fingerprints in faster product rollout (Commerce via DM, instant articles, etc.); 3) We think some senior execs would only work for him vs an outsider; and 4) We think Mr Dorsey as CEO is expected and supported by shareholders at this point."

The analyst said they think it's inevitable that once the new CEO is established, the board will be rejiggered for several reasons: the sudden CEO departure; the lengthy search process; and initial delays in product roll out.

"We think active involvement and stock ownership by these directors is critical (see table)," he commented. "Based on this, we think 2 of the 8 board members, are more likely to move on: Peter Currie (leading the CEO search, low ownership & activity) and Marjorie Scardino (low ownership & activity). We would look for the company to put more expertise on the board in media, tech, and operations."

The firm maintained a Buy rating and $38 price target on TWTR.

For an analyst ratings summary and ratings history on Twitter, Inc. click here. For more ratings news on Twitter, Inc. click here.

Shares of Twitter, Inc. closed at $27.96 yesterday.



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