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Dick Costolo is leaving Twitter, to be replaced by Jack Dorsey as interim CEO

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Will be moving on in the next few weeks, a source says

Twitter CEO Dick Costolo is out at Twitter, a source at the company tells The Verge. Costolo told the staff today he would be stepping down in the next few weeks. Twitter co-founder Jack Dorsey will be interim CEO while the board conducts a search for a permanent replacement. Costolo's future at the company had been in question for the past six months as anemic user growth and a struggling stock price have led some investors to call for a change.

"I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the company," Costolo said in a statement. "We have great leaders who work well together and a clear strategy that informs our objectives and priorities. There is no one better than Jack Dorsey to lead Twitter during this transition."

At a conference call later in the day, Costolo said he had begun thinking about leaving the company at the end of last year. The move came as a shock to the company's employees, who generally liked and respected Costolo as a leader. "I'm in tears over here," one employee told The Verge. And it comes just a few weeks after Costolo appeared at the Code Conference to tell attendees that he and Twitter's board shared a vision for the company's future and were marching in lockstep. "The board and I are completely in sync," he said. "Believe me, I don't worry about that at all."

At the same time, Twitter has increasingly been subject to rumors that it will be acquired, notably by Google. Asked about a potential sale on the conference call, Costolo left the door open. "We're obviously fully committed to maximizing value for shareholders," he said. "We see no reason we can't continue to do that as an independent company. Of course, the board understands its fiduciary duty and would carefully evaluate any offer. But the focus right now is on maximizing Twitter's value ... as an independent public company."

"There is no one better than Jack Dorsey to lead Twitter during this transition."

"I’m particularly excited about the product work that we’ll unveil this fall," said Costolo in an email to employees obtained by The Wall Street Journal. Costolo, who had been hired as the company's chief operating officer, became CEO in October 2010. He replaced Twitter co-founder Ev Williams, who in turn had replaced Dorsey. "We have an exciting lineup of products and initiatives coming to market, and I look forward to continuing to execute our strategy while helping facilitate a smooth transition as the Board conducts its search," Dorsey said in a statement.

Costolo oversaw a period of tremendous expansion at Twitter, leading it to hundreds of millions of users and a successful initial public offering of its stock. But he was plagued by external doubts that the company would ever reach a scale comparable to Facebook, which now has well over 1 billion monthly active users. In an effort to acquire more users, Costolo replaced his head of product twice in the year after its IPO. Its current head of product, Kevin Weil, has notably accelerated the pace of releases from the company, improving morale within the product organization and giving a sense of velocity to the company that makes Costolo's abrupt departure all the more surprising.

Earlier this month, early Twitter investor Chris Sacca posted a long essay on his website calling for a raft of changes to Twitter's product, putting additional pressure on the company. But during the all-hands meeting today, Twitter board member Peter Fenton said "it wasn't Chris Sacca who made this happen," according to someone who was present. "This transition is not the result of anything more than Dick deciding to move on from his role as CEO," Dorsey said on the conference call.

A number of fascinating Twitter dramas are now about to unfold, none more interesting than Dorsey's interim return to power. As documented in Nick Bilton's essential book about the company's early days, Hatching Twitter, Dorsey has maintained a strong emotional connection to the company since he first had the idea for a lightweight way to share status messages with friends. Dorsey is now CEO of Square, and it remains to be seen how he will divide his time — and whether he will indeed relinquish the top job at Twitter to someone else.

Update, 5:30 p.m.: Added comments from Costolo and Dorsey from their conference call with analysts, and email to employees.