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Artisoft halves workforce

Restructuring plans at the struggling network software firm include selling the headquarters and dismissing 140 of 270 employees.

Aiming to cut costs amidst continued losses and shrinking revenue, network software maker Artisoft (ASFT) today said it will cut over 50 percent of its workforce as part of a restructuring effort.

The company's stock, which has been sliding for the past year, gained 1/2, or 22 percent, today to close at 2-3/4.

Artisoft plans to cut its workforce to 130 employees from 270 by September 1.

"This reduction is being made worldwide from top to bottom. There is no office that is not being affected," said Paul Thomas, who was announced today as company president and chief operating officer.

Thomas said the company has been without a president and COO since Joel Kocher left last fall to join Apple clone maker Power Computing.

The majority of the layoffs will be in Arizona, where about 60 employees will lose their jobs and the company will sell its headquarters. Artisoft plans to move to a smaller leased office. This sale is expected to close in the September quarter.

"We've been trying to do too much for a company our size," he said.

Artisoft is cutting back on minor products to focus on revenue-producing titles or ones that have the potential to do so. The company will eliminate 300 of the 500 products it produces, which comprise less than 5 percent of the total revenue.

"You have to stock them and support them and market them and it takes your limited resources and spreads them out too thinly," said Thomas.

Instead, Artisoft will focus on 12 to 15 key products, including its LANtastic networking products, which generates the majority of the company's revenue, said Thomas. He added that ModemShare and Internet software such as i.Share will also earn greater focus.

Without these additional products, Artisoft will report reduced net sales for the June quarter. In the previous quarter, the company reported revenue of $8.5 million, Thomas said.

And the company will also report one-time charges during the quarter for severance, office closures, moving and other costs associated with the restructuring. Thomas declined to comment on the magnitude of the charges. The company plans to announce its quarterly results in August.

Meanwhile, the company will close some of its international sales offices over the next several months.

During the June quarter, Artisoft said it will reduce its U.S. distribution channel inventories and non-U.S. distribution channel inventories.