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Sources: Jack Dorsey Expected to Be Named Permanent Twitter CEO

Jack is apparently back — for good this time.

Twitter co-founder Jack Dorsey, who has been serving as interim CEO for the past three months, is expected be named the company's new permanent CEO as early as tomorrow, although that timeframe may change, according to sources. Dorsey will apparently continue to run Square, the payments company he founded where he's also CEO.

Update: Sources said that it's not clear if the board has officially voted on Dorsey's appointment, because it was still settling the status of other key execs this week, most specifically revenue chief Adam Bain and CFO Anthony Noto. Bain is widely expected to become COO, although Noto may also report directly to Dorsey. Both have indicated to the board, said multiple sources, that they want Dorsey in the top job. These discussions with them about a new regime started recently.

Jack Dorsey, CEO of Twitter.
John Chiala | CNBC
Jack Dorsey, CEO of Twitter.

The Twitter board also has what one source called a "Plan B" of one serious outside candidate, whom I have been unable to confirm. But every single person I have contacted who has been seriously considered and also contacted by the company's recruiting firm, Spencer Stuart, said that their discussions did not progress very far.

As Re/code previously reported, despite claims that the CEO appointment was "imminent" a month ago, the board would wait until the end of the quarter (today) to act, with the choice stretching into October (tomorrow). That said, the choice will not be final until there is clarity on all the top operating roles.

If it happens, the selection will not be unexpected, with Dorsey in the pole position for most of the search, which has dragged on since this summer when Dick Costolo stepped down as the San Francisco social communication company's top exec.

Sources added that there is likely to be some shake-up of the board too, most immediately the departure of Costolo as a director.

Twitter has been in the midst of a high-profile CEO search since Costolo announced he was stepping down in early June and Dorsey took over in the interim. Dorsey has always been a serious candidate for the job, but few believed that he'd ever leave Square, which recently filed for an IPO, in order to take it. The CEO search committee complicated matters in mid-June by stating what seemed to be obvious: That the Twitter CEO role was a full-time job.

In other words, Dorsey would have to choose between the two companies.

That declaration, as it seems to have turned out, has been a largely empty one. The idea that Dorsey might return gained steam among people both inside and outside the company over the past few months even though he had no intention of leaving Square. He even referred to the companies as his two children when discussing the dilemma, according to a source. Another in-house candidate, head of revenue Bain, was also seriously considered and is very popular inside Twitter HQ. But Bain has refused to be considered for the job so long as Dorsey still wanted it, according to sources. So Dorsey it is.

There's much to be done at Twitter, which is going through arguably the roughest stretch in the company's history (which is saying something). The stock hit an all-time low in late August, and those close to the company are concerned about a lack of product vision coupled with the recent departure of three top product executives. Twitter's product team has since been restructured, with Jeff Seibert, who was running Twitter's developer products, now in charge of Twitter's core flagship product instead.

Dorsey said himself on the last earnings call that Twitter's product team needs to step up, and those close to Twitter believe that the company's product woes are a major reason Dorsey, who is very much a product visionary, was brought back in.

But while Twitter has finally filled its top position, it's likely that Dorsey's return will mean the departure of others from Twitter's upper ranks. Longtime head of communications Gabriel Stricker has already been ousted. Costolo was well liked internally, but criticized for failing to articulate Twitter's long-term mission. Dorsey is very much the opposite, and those who have worked with him say he can be ruthless if you disagree with his vision.

That may be just what Twitter needs right now. Dorsey asked Wall Street for patience on the company's last earnings call. Now, perhaps, he will have a chance to show investors what they're waiting for.

Twitter and Square both declined to comment.

By Kara Swisher and Kurt Wagner, Re/code.net.

CNBC's parent NBC Universal is an investor in Re/code's parent Revere Digital, and the companies have a content-sharing arrangement.