DCSIMG

COMMENT: Twitter | Mulberry | Trams

Terry Murden says US analysts believe Twitter has sufffered rocky internal dynamics. Picture: Julie Bull

Terry Murden says US analysts believe Twitter has sufffered rocky internal dynamics. Picture: Julie Bull

  • by TERRY MURDEN
 

ONE story trending on the micro-blogging site Twitter yesterday was the resignation of its own chief operating officer, Ali Rowghani, who seems to have taken the blame for lacklustre sales growth.

It may be premature to see this as a signal of the tech bubble bursting, but it will surely sound a few alarm bells among investors that one of the supposed stars of the sector is losing pace. Twitter’s first-quarter results, published in April, revealed slowing momentum at the company which had been touted during the run up to last year’s flotation as one day matching Facebook’s scale.

Analysts in the US were describing Rowghani’s departure as a result of Twitter’s “rocky internal dynamics” and said it was still learning how to handle the demands of being a public company. As a listed entity, growing the top and bottom lines is crucial and while Twitter warned that it would be unprofitable for years to come Rowghani was under pressure to increase revenue and members.

Unfortunately, it has suffered two quarters of decelerating user growth and has struggled to improve how frequently people engage with the service. The extent of investor concern is shown in Twitter’s valuation which has fallen more than 40 per cent this year.

Rowghani appropriately tweeted his own resignation. “Goodbye Twitter. It’s been an amazing ride, and I will cherish the memories,” he said, suggesting a proper parting. He will not be replaced, though he will remain as an adviser at the company which has hinted at further management change.

Mulberry in search of a clearer proposition

lUXURY goods have remained broadly in demand through the economic downturn, though it has not been plain sailing. As in all sectors, some have got the hang of it more than others.

Mulberry is an interesting test case. Despite soaring sales in recent years, it has some underlying weaknesses that are now impacting on its growth.

While enjoying huge success in western markets, its potential expansion in the Far East has suffered from low exposure in China where it has only a handful of stores. As highlighted by Qing Wang of Warwick Business School, this contrasts with Burberry which has more than ten times that number and has seen sales rocket in the world’s second-biggest economy.

Wang’s diagnosis is that Mulberry needs to resolve exactly what it wants to be, an uncertainty that hinges on recent shifts of strategy on pricing. Last year it raised prices in a bold attempt at showing its aspiration into the luxury category, but failed to match that with a marketing exercise to back it up. Recently it has been cutting prices following a profits warning.

These moves leave the customer wondering precisely where Mulberry is trying to position itself.

Chance to learn the cause of trams fiasco

Lord Hardie, the former Lord Advocate, will chair an inquiry into the Edinburgh trams fiasco and without doubt the residents of the city will expect nothing less than a few sacrificial lambs.

It should at least reveal the extent to which incompetence played a part in the poor construction and overall planning errors that led to cost over-runs and delays. No stone should be left unturned.

 

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