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Critical Path ups targets, cuts jobs

Though the once high-flying Internet company predicts it will see higher fourth-quarter revenue than expected, it intends to lay off almost a third of its work force.

Critical Path on Thursday raised its fourth-quarter revenue forecast, but also announced plans to cut 30 percent of its work force to spur profitability in 2003.

The San Francisco-based messaging software and services company said its fourth-quarter revenue is expected to reach between $21 million and $22 million, compared with its earlier guidance of $19 million to $21 million.

The company, however, also announced it would slash costs throughout the first half of the year. Critical Path plans to consolidate offices and cut roughly 175 positions. These moves are expected to result in a charge of $7.5 million over the next six months, it stated.

With these changes, the company hopes to break even during the first half of the year, based on earnings before interest, taxes, depreciation and amortization (EBITDA), and become profitable during the second half of the year.

"For that reason, we are taking the company to a lower cost structure that we believe will support our growth targets," William McGlashan Jr., chief executive of Critical Path, said in a statement.

The company expects to reduce its operating expenses by about $22 million annually with the strategy.

Critical Path, once a high-flying Internet company that fell two years ago into critical condition over accounting irregularities, has strived to overcome its past with a new management team and strategy.

But its stock has continued to falter, and the company is fighting a potential de-listing by Nasdaq. Critical Path shares remained flat in morning trading at 90 cents a share.