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Twitter fails to nab new tweeters

Twitter and its new CEO Jack Dorsey still face plenty of challenges as they work to convince more people to spend time on the microblogging site.

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Twitter faces a long slog getting new users to sign up, its latest earnings report suggests.

Do you use Twitter?

If you answered "no" or "sometimes," you're in the great majority. In fact, more people around the world spend time on Facebook, Snapchat and Instagram than they do on the microblogging service.

Worse, relatively few consumers feel the need to sign up. That's bad news for Twitter, which has seen its growth of monthly active users grind almost to a halt.

That's the problem CEO Jack Dorsey is working hard to reverse. To do that, though, he has to freshen the look and functions of a 9-year-old service that's become stale. Despite Twitter's outsize cultural influence, its claims to distinction are immediacy and a 140-word character limit on how much you can say in a tweet. Now Dorsey, Twitter's co-founder and first CEO until 2008, is rebooting the service to be more compelling.

Earlier this month, the San Francisco-based company updated the service with Moments, a new feature of curated tweets, videos and images of major trending events, such as concerts, sports contests and breaking news. On Tuesday, Dorsey told investors that Moments allow users to discover other members' Tweets, expanding the usefulness of the information on the service.

"I see it as one source, one conversation piece that makes all of Twitter better," he said.

This month Dorsey also told employees he's streamlining operations and reorganizing Twitter's product and engineering teams to focus on "the experiences which will have the greatest impact." On Tuesday, Dorsey said Moments and other projects are an attempt to reimagine Twitter's fundamentals.

In addition, Dorsey is making a concerted effort to woo developers to start writing apps for the messaging service. All these efforts have one aim: To make Twitter more inviting and engaging for a mainstream audience and, in turn, attract more advertisers.

JMP Securities analyst Ron Josey said it's unlikely Twitter will demonstrate fast growth anytime soon.

"It's likely not going to be one silver bullet to change the trajectory of their engagement," he said, referring to the number of users. "It will take multiple products to see some changes."

On Tuesday, Twitter reported third-quarter results that show it will take time and patience for Dorsey to achieve his goal.

"We continued to see strong financial performance this quarter, as well as meaningful progress across our three areas of focus," Dorsey said in a statement. "We've simplified our roadmap and organization around a few big bets across Twitter, Periscope, and Vine that we believe represent our largest opportunities for growth."

For the three months ended in September, the number of people actively using Twitter every month rose 1.2 percent from the previous quarter to 320 million.

The company also reported a profit, excluding some costs, of 10 cents a share on sales of $569 million. That beat Wall Street's estimates. Analysts on average expected a profit, minus some costs, of 5 cents a share on $559.8 million in revenue.

After adding expenses back in, Twitter posted a loss of 20 cents per share.

For the current quarter, Twitter forecast revenue of $695 million to $710 million. That dramatically missed analysts' estimates of $740.2 million.

Investors weren't happy with either the forecast or Twitter's progress in adding users, sending shares down more than 12 percent, to $27.56, in after-hours trading.

During Tuesday's conference call with investors, Dorsey didn't mention specifics about the company's product roadmap, reiterating the need to make Twitter easier for users. Dorsey and other executives declined to project user growth, but said about 1 billion people each month see tweets on sites and apps outside of Twitter.

Also Tuesday, Twitter executives said they were ramping up the company's own marketing, including airing an ad during Game 1 of the 2015 World Series telecast later that evening.

Update, 4:15 p.m. PT: Adds comments from Twitter and analysts.