Twitter CEO vows to address slowing growth

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SAN FRANCISCO — Twitter, the microblogging service that amassed more than 200 million users in seven years, is now struggling to widen its audience as quickly while adjusting to life as a public company.

The San Francisco-based social network, which Wednesday posted its first earnings report since going public in November, said its monthly active users totaled 241 million in the fourth quarter, up 30 percent from 185 million a year earlier and slower than 39 percent seen in the prior period. Usage also dipped, with 148 billion views of Twitter timelines compared with 159 billion views in the third quarter.

Chief Executive Officer Dick Costolo said in an earnings call that he is focused on reversing the trend, but the results raised concerns that Twitter's easy growth phase is ending.

As recently as a year ago, Twitter, which began in 2006 and lets people communicate through 140-character messages, was adding new users at rates of more than 60 percent a year and timeline views were soaring. If the usage declines continue and new members join more gradually, the unprofitable company may fall short of its goal to be a mainstream service like Facebook and may find it difficult to justify its $34.7 billion market capitalization.

"Twitter needs to answer the question about whether it can ever become a mass-market product, or whether it's more destined to be a niche for news junkies," said Robert Peck, an analyst at SunTrust Robinson Humphrey Inc. in New York. "Depending on how fast it's growing, that's what we're willing to pay for it."

Costolo said on the earnings call that the company has a plan to increase the number of users and engagement, primarily by making the site easier to use.

"Up until last year, our growth has been viral and organic," he said. "Growth was something that happened to us." Now "it will be a combination of changes introduced over the course of the year that will start to change the slope of the growth curve."

Brian Blau, an analyst at Gartner Inc., said the slowing user growth was troubling, given that Twitter's advertising business depends on more people spending time on the service.