> Quick off the cuff math, if you figure $200k all-in per employee, that's $100mm/year they'd save by going from 1000 to 500.

Your math is off by an order of magnitude. Twitter spends >$100M per quarter on stock-based compensation alone. [0] Just what do you think Twitter's major expenses are in "Research & Development" (for example)? I guarantee you that employees are by far their number 1 line item (as they are for most tech companies).

Twitter's Q3 2015 expenses were ~$500M. Do you really think that the majority of that wasn't salaries?

[0] http://seekingalpha.com/article/2253623-twitters-stock-based...