Twitter names former Goldman Sachs banker new CFO

Twitter Inc. named former Goldman Sachs Group Inc. banker Anthony Noto as chief financial officer, enlisting the executive who led its initial public offering to help the company regain favor with investors.

Noto, 46, replaces Mike Gupta, who is assuming the role of senior vice president of strategic investments, the latest management shuffle at the microblogging service. Noto left Goldman Sachs in May for hedge-fund firm Coatue Management LLC, and is now joining Twitter instead.

The changes come almost three weeks after Ali Rowghani resigned as Twitter’s chief operating officer after a power struggle with chief executive Dick Costolo over responsibilities, according to people familiar with the matter. The San Francisco-based social-media company has experienced decelerating user growth and has struggled to boost people’s engagement with the service.

“He definitely understands Wall Street, how investors value the company, what investors are focused on,” said Neil Doshi, an analyst at CRT Capital Group LLC in Stamford, Connecticut, who rates Twitter the equivalent of a hold. “Twitter has done a fantastic job in posting very good financial results, but they missed the mark on how important investors view the user growth at Twitter.”

The shares of Twitter rose 4.5 percent to $42.81 at 11:07 a.m. in New York. The stock had declined 36 percent so far this year through Monday amid concern that user growth would continue to decelerate.

FOOTBALL l CFO
A dot-com era Internet analyst, Noto has served as CFO before, at the National Football League. He was a star football player in college at the U.S. Military Academy at West Point, leading the team in tackles in 1990. Noto trained to be a member of the Army Rangers and spent time in the Middle East while serving as a signal officer in the Army’s infantry.

“I could not be more excited about joining the @Twitter team & helping them reach every person in the world,” Noto wrote on his Twitter account shortly after the appointment, which was disclosed in a filing Tuesday.

Noto’s salary will be $250,000, and he’ll receive a one- time stock award of 1.5 million restricted shares vesting over four years, worth about $64 million at current prices. He was also given a one-time option grant to buy 500,000 shares, according to the filing. He’ll start working at Twitter within 30 days.

Twitter declined to make Noto available for comment. Noto and a representative from Coatue declined to comment.

SOLID HIRE
One of the few investment bankers who tweet regularly, Noto rejoined Goldman Sachs from the NFL in 2010 and also helped to secure the IPO for Yelp Inc. He was an analyst at Goldman Sachs from 1999 until 2008.

“He’s definitely a very solid hire for them,” said Benjamin Schachter, an analyst at Macquarie Securities USA Inc., who rates Twitter the equivalent of a sell. “As CFO, he’ll be likely the voice to Wall Street for the company, and he obviously understands very well what investors want to hear given his experience as an analyst.”

Noto joins a company known for its rocky internal dynamics. Costolo originally gave Rowghani control over the Twitters products and services late last year but decided to remove the responsibility in April, precipitated by the hiring of Google Inc. maps executive Daniel Graf as vice president of consumer products, people familiar with the matter said at the time.

This year, Twitter’s head of consumer product and head of engineering both resigned amid pressure to expand the company’s business. In May, Twitter appointed a new head of engineering, Alexander Roetter, who was already at the company.

OPERATING CFO
Costolo tweeted: “Welcome @anthonynoto and looking forward to @mgupta’s new role leading strategic investments!”

Twitter’s board, which includes co-founders Jack Dorsey and Evan Williams, has raised questions about growth in members and user engagement. Costolo has been concerned about building a stronger culture at Twitter and has been asking others for advice, one person familiar with the matter has said.

Departing CFO Gupta sold about $2.2 million worth of Twitter shares in May after a lockup on insider sales was lifted. He sold the shares to cover tax withholding obligations related to the vesting of restricted stock, according to a filing with the U.S. Securities and Exchange Commission.

GUPTA ROLE
Gupta will be working on strategic investments as Twitter continues to acquire companies to bolster its advertising business. The company said Monday that it agreed to buy mobile-advertising company TapCommerce. Twitter is paying $100 million for TapCommerce, according to a person with knowledge of the matter, its biggest acquisition since buying MoPub for $350 million in October.

Gupta tweeted: “Thanks @dickc Thrilled to start my new role as Head of Strategic Investments. Looking forward to having @anthonynoto on the team.”

Noto spoke about the role of a CFO a Tech Crunch conference in New York in May 2013, saying that the job requires “somebody you trust, that can truly be your partner, someone that can tell you you’re wrong.”

“The only way people can really be excellent is with truth, so you have to have a CFO who will have the intellectual capacity and conviction to tell you you’re wrong, and try to support that with data,” Noto said at the conference. “Today, I think a CFO needs to be more of an operating CFO, someone who’s using the financial data and the data of the company to help drive strategy, the allocation of capital, and the management of risks.”