From the SeattleTimes this morning...and more on the intentions not previously mentioned...
www.seattletimes.com
Tuesday, February 06, 2001, 12:00 a.m. Pacific
Infospace cuts 250 staffers
by Sharon Pian Chan
Seattle Times technology reporter
A week after announcing a major restructuring, Bellevue-based Infospace yesterday laid off 250 workers, or 21 percent of its employees.
The Bellevue-based provider of wireless and Internet content announced in its earnings call last week that it was realigning its core businesses and would provide new financial projections for the year 2001 in 30 days.
Layoffs were spread out across the company in an effort to control the enormous growth following its acquisition of Seattle-based Internet portal Go2Net, a move motivated by Infospace's strategy to expand horizontally into broadband. The two companies combined had made more than 20 acquisitions over the past two years.
"When you merge two companies with 500 people each, it's only logical to look at those areas that might have redundancies," said Joanie Hanson, senior vice president of investor relations and communications. "We outlined in our earnings call that we're realigning our infrastructure business."
Ed Belsheim, Infospace's chief operating officer, delivered news of the layoffs to the departing employees in a meeting yesterday at 2:30 p.m. Today was the final day for employees given notice. The company is not disclosing the details of its severance package.
The company ordered its department heads to focus on the infrastructure business and evaluate how to cut staff. "It's about controlling the cost beast," Hanson said. "You don't want to grow out of control."
Analysts weren't particularly surprised by the announcement, given the current layoff trend and slowing economy.
"I think it falls into the realm of necessary evil," said John Graves, analyst for SG Cowen Securities. "Frankly, it's fully expected. This is a company that had hired ahead of the revenue ramp. It also comes into the overlaps through the merger. These events get you through the lean times and '01 is going to be one of those times."
In last week's call, Chief Executive Naveen Jain announced that Infospace would de-emphasize its "low-growth, non-recurring, nonscalable" consumer business in favor of the faster-growing infrastructures businesses: merchant and wireless services.
Although 52 percent of Infospace's revenues come from the consumer side through advertising sales, the company's long-term strategy has been to position itself as an infrastructure company selling wireless, merchant and broadband services to businesses. However, no one had expected the company to announce the dissolution of its consumer businesses so soon.
"We were assuming moderate growth level in the consumer growth business while the wireless and merchant businesses ramped up," said Allyson Rodgers, analyst at Ragen MacKenzie. "It was surprising to me that they said they would be getting out of it sooner rather than later."
Although company said layoffs were evenly spread through the company, the bulk of its consumer assets are operated out of Go2Net, including search engine MetaCrawler and Dogpile.
Russell Horowitz, former chief operating officer and originally chief executive of Go2Net, stepped down last month along with Infospace Chief Executive Arun Sarin, who had been hired from Vodaphone to land partnerships with wireless carriers.
Hansen said that Go2Net's consumer assets such as MetaCrawler would remain part of the business but that those products would now be licensed to businesses rather than self-operated for consumers.
Sharon Pian Chan's phone number is 206-464-2958. Her e-mail address is schan@seattletimes.com. |
