InsWeb, which helps link consumers with auto, health, home and life insurance providers over the Web, said its restructuring efforts are intended to cut operational costs in order to expand its online insurance-agency business and help boost revenues.
The expected 40 percent staff reduction will result from initiatives or business units that will be discontinued as part of the company's overall consolidation efforts, Redwood City, Calif.-based InsWeb said in a statement. The discontinued units or business focuses will be areas that are not considered part of the company's core business model.
Backed by Japanese Internet investment company Softbank, InsWeb, which last year enjoyed a successful public offering, got caught in the recent downdraft that weighed down most Internet stocks. The company's market capitalization has dropped to $103 million from approximately $544 million last year.
InsWeb has also seen heightened competition with the recent popularity of online marketplaces. In recent months, several online marketplaces aiming to serve the insurance industry have popped up, such as one unveiled by health giants Baxter, Johnson & Johnson, GE Medical and others.
For the second quarter, InsWeb said it expects revenues to be approximately $5 million and intends to take one-time charges related to the planned restructuring and discontinuation of Benelytics, a health insurance firm InsWeb acquired last January. Due to some anticipated near-term effects from the restructuring plans, the company also said it estimates that quarterly revenues for the rest of the fiscal year will be "significantly lower" than originally projected.
InsWeb said the restructuring efforts, as well as its more than $75 million in cash and short-term investments as of March 31, will give the company enough cash to operate "comfortably" through 2002. InsWeb expects it will begin generating profits by 2002.
The company also announced the promotion of Mark Guthrie to the position of president, adding to his existing role as chief operating officer. Guthrie, 39, will help guide the company's new initiatives, including plans to consolidate its corporate headquarters and operations and relocate them to the Sacramento, Calif., area later this year.