Eliminating the 50 jobs is a "prudent move" for the company, CEO Richard Owen said Wednesday. "It's a fairly modest amount. We see it as a tilt of the rudder, rather than a really major event."
The company has been looking for ways to save cash over the past couple of quarters, he added. The layoffs--most of which took place Tuesday before AvantGo reported earnings--are the company's first.
AvantGo is best known for its software that allows people to download content from the Internet onto their Palm- and Pocket PC-based handhelds. However, most of the company's revenue comes from selling the technology to businesses that want to give workers mobile access to company information.
Excluding charges, the company lost $9 million, or 29 cents a share, on revenue of $7.3 million for the first quarter. In the same period last year, AvantGo lost $4.2 million, or 23 cents per share, on revenue of $1.7 million. A consensus of analysts expected AvantGo to post a loss of 35 cents per share, according to First Call.
AvantGo, which was founded in 1997, said it expects to incur one-time severance costs of about $400,000 in the current quarter and will take a $2.5 million charge to get rid of excess equipment and office space.
"We've affirmed our guidance for the year," Owen said. "We feel things are on track. We're having to work hard to stay on track, but the point is that we're on track."
Merrill Lynch analyst Mark Fernandes said the job cuts make sense to keep the company on a path toward profitability.
"They have to keep in mind that the environment is pretty tough," Fernandes said.
The San Mateo, Calif.-based company said it ended the first quarter with $66.5 million of cash and investments and said it believes it can reach profitability with its current cash position. Fernandes said the company's cash, which amounts to $2.12 per share, should be adequate to allow AvantGo to survive without additional funding until it reaches profitability, which he projects will be the second quarter of 2003.
Last month, the company introduced a new version of its software for consumers and businesses.
News.com's Natalie Weinstein contributed to this report.