A prudent move:
thestandard.com
Dark Clouds Forming Over Loudcloud
By Ari Weinberg
May 01 2001 02:27 PM PDT
Only 2 months after its IPO, the much-hyped maker of Web-automation software says it will cut 20% of staff.
Less than two months after its IPO, Internet services firm Loudcloud said Tuesday that it is cutting its workforce by 122, or nearly 20 percent, to 507 employees.
Loudcloud, the much-hyped brainchild of Netscape founder Marc Andreessen and former AOL executive Ben Horowitz, has been one of the most-followed young companies during the past two years. Conceived during the go-for-broke dot-com era of expansion, Loudcloud provides software and services that automate Web services.
As many of its potential customers – upstart dot-coms – went down the tubes, Loudcloud realized that it had to alter its business model to attract mainstream customers. The result of this change was last month's release of a new version of its Opsware technology, allowing Loudcloud services to run from corporate data centers, as opposed to leased off-site centers in the original model.
Despite this, Loudcloud's business model is capital- and labor-intensive, and expensive to support. With the recent IPO bringing in $150 million – much less than originally expected – Loudcloud has found itself required to trim its staff in order to "reach cash-flow break-even with its existing cash and available financial resources," the company said in a press release. Loudcloud Chairman Marc Andreessen told TheStandard.com last month that he did not expect Loudcloud to look for a secondary offering any time soon and that the company will operate without more funding.
"We are beginning to recognize the leverage in our business model, which is designed to replace human capital with technological automation," President and CEO Ben Horowitz said in a press release, making the choice between man and machine very clear.
In a separate announcement, Loudcloud appointed a new chief marketing officer and executive VP of business development.
Shares of Loudcloud closed up 53 cents, or 9 percent, to $6.43; however, shares were down to $6.25 in the after-hours market. The company's current market value is $494 million, down from its original estimate that it would be a billion-dollar company. |
