E-commerce and publishing software maker Open Market today said layoffs are imminent because of a pending corporate revamping that the company said is necessary to get its finances back on track.
Open Market executives said the dismissals are part of a restructuring plan needed to get its cost structure in check. The company employs 480 people and plans to layoff about 100, or about 20 percent of its total labor force.
Less than three weeks ago, Open Market warned investors that its third-quarter results would be below expectations. The Massachusetts-based software maker today reported net revenue of $14.4 million for the third quarter ended September 30, below even its revised expectations and well short of the $15.7 million in revenues it posted for the same period last year.
Open Market said its net loss for the quarter was $6.6 million or 19 cents per share, well below Wall Street's consensus estimate of a loss of 7 cents per share, according to research firm First Call.
A large part of the $2 million to $4 million restructuring charge the company expects to record in the fourth quarter will come as a result of the layoffs, a spokesperson said.
But the company pointed to two other factors that adversely affected its business during the quarter. Revenue on sales of its Folio products to both corporate customers and through the reseller channel was significantly less than expected.
"We were disappointed in our financial results this quarter, which fell well short of external expectations for both revenue and net loss per share," CEO Gary Eichhorn said in a statement. In addition to Asian economic failures and software distribution problems, "we experienced some execution issues in the sales organization. As part of the action plan to address these issues, we've made the decision to realign the cost structure of the company going forward."
Founded in 1994, Open Market provides application software products and professional services that allow users to engage in business-to-consumer and business-to-business Internet commerce, information commerce, and commercial publishing.
Open Market shares were off more than 12 percent at 6.375 in morning trading, down dramatically from the company's 52-week high of 29.125.