StorageNetworks changes CEO, halves staff

The new job cuts, the latest in a series of work force reductions, leave the company with 110 employees. The company has scaled back dramatically from the 670 employees it had roughly two years ago.

The company named Paul Flanagan, previously chief operating officer and chief financial officer, as its new CEO and president. He replaces co-founder Peter Bell, who is pursuing "other personal and business interests," according to the company.

Bell will remain chairman of the company's board of directors, while Flanagan will join the board as a director. Scott Dussault, the company's vice president of finance, will become chief financial officer.

"After four years, I feel that it is time for me to step back from the day-to-day management of StorageNetworks," Bell said in a statement. "As co-founder of the company, this is a particularly difficult decision for me personally. However, having someone as qualified and as committed as Paul to take over as CEO and president certainly makes this decision easier."

StorageNetworks said that because of the weak economy and still-immature nature of the market for its software, it will focus on its existing relationship supplying software to Electronic Data Systems. The company hopes to take the technology it develops for EDS and then find additional customers.

As a result, the company said it is reducing its sales and marketing organizations, as well as cutting back development efforts on projects not related to EDS.

Shares of the company were trading on the Nasdaq composite index Wednesday at $1.15, down 19 cents, or 14 percent.