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Engage halves workforce to push profits

Engage Inc. (Nasdaq: ENGA) announced Thursday that it was breaking it off with half of its employees as part of a plan to accelerate profitability, which should now come by the fourth quarter of 2001.

Shares in the marketing software company were unchanged at 1.13 Thursday morning. The stock has been lackluster since December, when the company reported a weak quarter. Analysts had said they would hold out for details on restructuring before opining on the stock.

Over the next several months, the company said headcount will be reduced by 550, or about 50 percent, through a combination of layoffs, job eliminations and attrition.

Engage will take a cash charge of about $17 million to $20 million as part of the restructuring, and an additional charge of between $23 million and $25 million in non-cash charges.

Once implemented, the job cuts and restructuring are expected to generate better operating margins and cost reductions of around $120 million to $150 million.

As part of its restructuring, Engage will increase its focus on software, consolidate offices and renegotiate agreements with some of its network Web sites to increase the percentage of revenue it retains.

The changes should bring Engage to break even on a cash earnings basis by the end of the fourth quarter in 2001. As of the end of November, the company held $100 million in cash and cash equivalents. It said that should be enough to fund until its profitable.