Twitter Drops Its COO: What Investors Need to Know

Ali Rowghani is no longer the COO of Twitter, and the company has no plans of filling the position.

Jun 12, 2014 at 11:30AM

In an SEC filing today, Twitter (NYSE:TWTR) said Ali Rowghani, is no longer the Chief Operating Officer of the company and that it won't be replacing him in the position. Instead, the company will spread out his duties among members of the upper management.

No COO, no big deal?
As Bloomberg reported, this isn't the first time the company has gone without a COO. Twitter Chief Executive Officer Dick Costolo started as COO back in 2010 and then replaced the former CEO later that year, leaving the COO position vacant for about two years. That's when Rowghani moved into the role, as Twitter hired Zynga's Mike Gupta to take over as Chief Financial Officer.

Though Rowghani is leaving the COO position, the filing said he will remain a Twitter employee and will be a "strategic advisor to the CEO."

Trouble brewing at Twitter
An article published by Re/code Wednesday night said a big shakeup was coming at the company and mentioned that Rowghani had essentially been demoted when Twitter hired its new product vice president, but failed to have him report directly to Rowghani.

Re/code said, "For instance, product VP Daniel Graf, who was hired in April, does not report to Rowghani, who had been overseeing product since last fall. Now the unit run by Graf reports directly to CEO Dick Costolo. That move was a clear demotion for Rowghani, who had been charged with goosing Twitter's consumer offering and also attracting more users to its platform." 

Rowghani may have recently ruffled some feathers at Twitter when he sold 300,000 of his shares for about $9.9 million. This came as Twitter's stock price is down about 44% year to date.

Rowghani isn't the only one at Twitter to have major job change recently. Christopher Fry, the company's head of engineering left the company last month, shortly after Michael Sippey, the former VP of consumer product left in January.

Foolish final thoughts
Rowghani was considered an important part of Twitter's leadership team, so although the COO position may not matter as much to the company, it seems Rowghani's absence will. It's always unsettling for investors to see major departures like this one -- as well as Fry and Sippey's -- so soon after the company's gone public.

Though Twitter said Rowghani will stay on as an advisor to Costolo, it's hard to imagine that this will be a smooth transition out of leadership for the former COO, or that Rowghani will be satisfied with less influence in the company.

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Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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