By Supriya Kurane and Gerry Shih
(Reuters) - Twitter Inc on Thursday announced the resignation of its chief operating officer, who had been responsible for the social media company's efforts to revive flagging user growth.
Ali Rowghani, once seen as an influential No. 2 who oversaw Twitter's product development, finances and dealmaking, departed after clashing with Chief Executive Officer Dick Costolo over whether he should continue to oversee product, a person familiar with the matter said.
Although he had been praised for orchestrating a series of financing deals for Twitter that culminated in a successful initial public offering in 2013, Rowghani's exit, which had the backing of Twitter's board of directors, underscores the tensions and pressure at Twitter to tweak its microblogging offering to attract new users.
Formerly the chief financial officer at Pixar Animation Studios, Rowghani joined Twitter as CFO in 2010 but steadily expanded his influence to rival Costolo's. He was appointed COO in 2012 and was tasked last year with increasing Twitter's user base and revenue, with high-ranking executives such as former vice president of product Michael Sippey reporting to him rather than the CEO.
But the mood within the San Francisco company has turned sour as user growth flagged and its stock price traded at nearly half its value six months ago.
Costolo projected privately in 2013 that Twitter would reach 400 million users by the end of that year, according to news reports, but the company reported 255 million users as of early 2014.
The company said it did not intend to replace Rowghani, whose responsibilities will be taken over by other managers.
Twitter hired Google Inc executive Daniel Graf to lead its product development in April. The source familiar with the company's internal politics said that was what precipitated showdown talks between Rowghani and Costolo over his role.
Twitter shares jumped 3.5 percent to $36.80 on Thursday.
Some analysts warned Rowghani's exit would not be enough to spur growth at Twitter.
"His resignation implies that the platform has not seen acceleration in important user and engagement metrics," Jordan Rohan, an Internet analyst at Stifel, wrote in a research memo. "At this point we are not sure if or when user engagement will rebound."
Arguing that tweaks to Twitter's product would result in better user engagement, Costolo has asked Wall Street for time to show improvement, particularly in April after Twitter disclosed data showing flagging momentum in user growth.
But in the end, slowing growth may only be a reflection of Twitter's limited appeal.
"The issue for Twitter is not per se the management team," said Hudson Square Research analyst Daniel Ernst. "I think they are doing all the right things. The issue for Twitter is not Twitter, it's that the expectations Twitter could become as big as Facebook were incorrect."
Technology news website Re/code first reported on Wednesday that Twitter was considering a shake-up in top management, including a possible shift in Rowghani's responsibilities. (http://r.reuters.com/weq99v)
(Reporting by Supriya Kurane, Lehar Maan and Abhirup Roy in Bangalore and Gerry Shih in San Francisco; Editing by Don Sebastian, Jeffrey Benkoe and Tom Brown)