Engage to cut its work force in half
The online marketing company says it will lay off 550 employees over the next several months as part of a restructuring to cut costs by as much as $150 million.
Shares in the CMGI-owned marketing software company were unchanged at $1.13 in morning trading Thursday. 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, its work force will be reduced by 550 employees, or about 50 percent, through a combination of layoffs, job eliminations and attrition.
Engage, based in Andover, Mass., 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 noncash 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 breakeven 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 keep the company going until it turns a profit.