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RealNetworks cuts 80 jobs, with another 80 on the block

First round of layoffs -- about 7 percent of the company's workforce -- is part of the online media company's plan to cut $45 million in expenses.

RealNetworks revealed today that it plans to cut 80 jobs, or about 7 percent of its workforce in an effort to reduce operating expenses.

Another 80 people will be laid off during the next seven months, though the company said it hoped to redeploy many of them when their current assignments end. RealNetworks expects to record a charge of between $2 million and $2.5 million related to the layoffs in the current quarter.

Rob Glaser, who returned to the helm of the online media company in July, said in a companywide e-mail that the layoffs were the first step in the company's plan to reduce costs by $45 million:

Dear RealNetworks Team,

I'm writing to provide an update on the progress we've made over the past 8 weeks and to provide some context and information regarding the layoffs that are taking place today.

When I came back in as Interim CEO on July 3rd, I said we would focus on 3 things:

Reviewing and assessing all of our businesses and new initiatives,

Coming up with a go-forward strategy for RealNetworks that would set us up to grow and thrive, and

Putting together a plan to stop burning cash and to return the company to profitability.

I also said we would move fast, have a bias towards action, and would work hard to complete all 3 of these efforts within 2 months. After a lot of hard work by many people across the company and around the world, today I report to you that we have indeed achieved the 3 objectives we set out to work on beginning 8 weeks ago.

Very soon I will have a lot more to say about our collective assessment of our businesses and new initiatives, and about our go-forward strategy. Specifically, we have scheduled a series of company meetings -- both in Seattle and at our main offices around the world -- for on or around September 6th. After these meetings I believe that each of you in attendance will walk away with a clear understanding of our strategies and excitement regarding where we're going.

Today I will discuss our plans to return the company to profitability -- in a way that will set us up for future growth and success.

As we mentioned on our financial results call on August 8th, our senior team has put together a plan to cut at least $45 Million of annualized costs. This plan has several aspects to it; one of the main ones is to streamline our operations and to do things more efficiently.

Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1,140 people to about 980 people. We are doing this in two phases. The first phase, which begins today, involves laying off approximately 80 people, who are being given notice today.

The second phase, which will take place over the next 3 to 7 months, involves approximately 80 more people, who are being notified today that there is a specific future date when their current assignment will be ending. We hope to redeploy a number of these people when their current assignments end, but as of today don't know how many we will find positions for. These people are working on projects that will merge duplicate systems or otherwise make us more efficient.

I want to express my deepest gratitude to the approximately 160 people affected by today's announcement, and also my remorse that we have had to take these steps. You have all made major contributions to RealNetworks. We are grateful for everything you have done for our company and our customers.

I also want to express my appreciation to the approximately 980 people who are not directly impacted by today's actions, and to acknowledge that many of you are indirectly affected, because of the impact on your colleagues and friends.

Permit me to close on a personal note. When I came back into Real after having been away from day-to-day operations for two-and-a-half years, I thought there was a pretty high likelihood that there would be a day like today. I knew it would suck for everyone, and indeed it does.

But I promised myself that if we did have to do a significant layoff, I would do everything in my power to make sure that when we did it we also knew where we were going. I wanted to be able to look everyone in the eye and tell them that we have a plan to succeed that I believed in from the bottom of my heart.

I feel like we are almost there. While we still have a few areas to work out, we have made great progress. I can honestly tell you today that we are at least 80 percent of the way to having such a plan for every major part of our company, and have line-of-sight on the final 20 percent.

This clarity on strategy, as you would expect, has significantly influenced how and where we are cutting costs, and where we are investing for the future. I look forward to discussing this further when we meet next week.

Rob