RealNames cuts staff amid financial changes

The Internet keyword company lays off about 20 percent of its work force, succumbing to the growing financial reality-check gripping the Internet industry.

Paul Festa Staff Writer, CNET News.com
Paul Festa
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Paul Festa
2 min read
Internet keyword company RealNames laid off about 20 percent of its work force this week, succumbing to the growing financial reality-check gripping the Internet industry.

The layoffs, which leave RealNames with a staff of 254, come in a string of bad news for the company. In February, it faced an embarrassing database hack, and in May, the company withdrew its bid for an initial public offering. RealNames also has had difficulty raising consumer awareness of its system of simplified Web addresses.

RealNames chief executive Keith Teare said his company is doing well in general and that the cuts resulted from a newly stringent financial strategy pushed by a new management team.

"We're seeing the strongest momentum in our business that we've ever seen, with expansion on a whole number of fronts," Teare said in an interview. "But we now have a management team that sees that the market doesn't want to see excessive expenditure where there's not significant revenue being driven. So we're focusing on spending where there's more revenue potential."

Recent recruits to RealNames' management circle include Terry Holbrooke, former chief operating officer of Ziff-Davis, who is now RealNames' head of marketing; Chris Dobbrow, former general manager of Ziff-Davis and now RealNames' head of business development; and Mary Burnside, former chief operating officer of Novell, who holds that position at RealNames.

"You should interpret Special report: End of the Beginning this as a prudent management team doing the right thing to focus the business on the key drivers of revenue," Teare said.

The bulk of the job cuts were among temporary workers or in obsolete areas of the company, including some research and development projects, Teare said.

He added that the company is still hiring for sales and technical positions and that it recently doubled its office space in a move to Redwood Shores, Calif., from Redwood City, Calif.

Teare would not say exactly how many positions were cut but did not dispute a report on a Web site that put the number at 60. He did dispute a rumor that pegged the number at 100.

Teare still intends to take the company public but denied that the layoffs were executed in imminent preparation for another S-1 filing with the Securities and Exchange Commission.

"In my personal opinion, the market is not going to get significantly better for the rest of this year," he said.

The company is in the process of raising a total of $200 million with five private placements for its U.S., Japan, Europe, Asia and Latin America operations. The placements are scheduled to be completed by the end of the summer.

Teare declined to say how much cash RealNames had on hand but said it would last "way beyond the end of the year."