Engage vows to cut jobs, sell unit
The online advertising company says it will reduce its staff by about 20 percent and is in talks to sell its media business.
The Andover, Mass.-based company said it would trim its media division by 100 jobs, effective immediately, and eliminate another 125 positions if it does not find a buyer.
The company also said that it would not sell its database of anonymous consumer profiles, opting instead to discontinue its profiling service. The announcement serves to quell concerns raised by privacy advocates that in the event of a sale, the privacy of more than 88 million consumers monitored by ad tracking technology could be compromised.
Engage, like many online advertising companies, has been hobbled by weakened demand for ad technology and media services following the demise of numerous dot-coms.
As many Internet companies struggle to stay afloat or settle debts during the economic downturn, everything from office cubicles to customer lists have landed on the auction block.
Fears that Engage would sell its anonymous consumer profiles were touched off earlier this month when CMGI, its majority owner, withdrew a promised line of credit for $50 million and the company announced that it was considering "strategic alternatives" for the business.
Privacy advocate Jason Catlett, of Junkbusters, commended Engage's decision not to sell the profiles. He said he had feared that data held in tracking technology known as cookies could be compromised in the event of a sale. Engage, among other ad networks, uses cookies to trace consumer habits on the Web and build profiles based on visitor preferences. This information is then used to target advertisements.
In Monday's announcement, Engage said it would shift its focus from such operations to beef up software sales for the content-management market.
"Given the continued dramatic downturn in the advertising industry, Engage cannot sustain this media business at the expense of the far more promising software business," Engage CEO Tony Nuzzo said in a statement. "We believe today's decisive action will help us unlock the potential of Engage's software business and establish a singular focus on the high-growth opportunities we have identified."
Engage plans to discuss its fourth-quarter earnings and give guidance on its realignment in mid-September. Earlier this month, the company lowered earnings expectations for the fourth quarter and said it would not break even at the end of its first quarter, ending Oct. 31, as previously thought.
Monday's cutbacks are its third major cost-trimming exercise. Last September, the company laid off 175 people, or 13 percent of its work force, and reorganized its five divisions into two: Engage Media and Engage Software. In January, it reduced its staff by about 550 people, or 50 percent.