Juno cuts staff ahead of earnings

On the eve of announcing its fourth-quarter earnings, the Internet service provider shaves between 4 percent and 8 percent of its work force.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
2 min read
On Wednesday--the eve of announcing its fourth-quarter earnings--Internet service provider Juno Online Services shaved between 4 percent and 8 percent of its work force.

Juno Chief Executive Charles Ardai said about a dozen jobs out of roughly 325 were eliminated outright; about another dozen consisted of firings that followed routine year-end evaluations.

"We went through our standard year-end review process, and some cuts were performance-related," Ardai said.

He added that the bulk of the layoffs came as a result of Juno's cutting down on its subscriber acquisition marketing efforts and said the company would look for similar savings in the future.

"There might be others like that as the business shifts," Ardai said.

Juno, which offers free, advertising-supported Internet access as well as for-fee premium services, is expected to report a loss Thursday of 52 cents per share for the fourth quarter, compared with a loss of 45 cents per share for the same quarter last year, according to First Call. Analysts expect a loss for the year of $3.64 per share, compared with a loss of $1.84 per share last year.

One laid-off Juno employee said the cuts did not come as a surprise.

"There were rumors flying for the past few days, but no one knew until this morning what it would be like," said the employee. "It's been a really somber mood for the past few days, and today obviously much more so because it became a reality."

Juno earns money through subscription fees that run from $2.95 to $79.95 per month for premium offerings, such as tech support and wireless services. The company also gets some revenue through advertising and e-commerce. Because of the recent woes in online advertising, the company is relying increasingly on subscription revenues--which now account for about two-thirds of its revenue--and less on e-commerce and advertising, which account for the remaining third.

Juno has 4 million active subscribers, with 842,000 of them paid and the remaining 3.16 million subscribing free of charge.

The company employs about 250 people in its New York offices and about 75 in Hyderabad, India, which Ardai describes as an "up-and-coming" location, where U.S. companies are setting up shop to take advantage of lower labor costs.

In Hyderabad, Juno handles "certain functions that used to be handled out of the U.S.," Ardai said, including customer service. "That has allowed us to eliminate certain positions in the U.S.--just two or three."