Executive vice president Christine Aguilera told CNET News.com that most of the 50 people let go worked on the company's Web sites, Skymall.com and Skymalltravel.com. The Phoenix-based firm--known for catalogues found in the seats of passenger airlines--had a work force of 335 before the layoffs.
"We were profitable for four years prior to 1999," said Aguilera, who added that the company made significant investments into upgrading Skymall.com and launching Skymalltravel.com. "We have a core business model that makes money, and we are determined to return to profitability."
Skymall, which is perused by 500 million passengers a year, is only the latest e-commerce firm to resort to organizational changes. Drkoop.com said yesterday it had restructured portal deals with Go.com and American online in an effort to save money. The firm also announced it was running out of cash.
Peapod and CDNow are also among a growing list of Net firms caught up in a whirlwind shakeout. With stock prices in the cellar and cash becoming scarce, online retailers are scrambling to reduce their overheads.
"This is the shape of things to come," said Credit Suisse First Boston retail analyst Chris Vroom. "A lot of companies expanded very rapidly based on expectations that the capital markets would remain strong. It hasn't, and now they know it's going to be a challenge to raise money, so they have to conserve their cash."
Skymall, which finished the day trading at $3.13, is down 57 percent from last year. The company is scheduled to report earnings on May 2.